Carroll’s pyramid of CSR: taking another look – International Journal of Corporate Social Responsibility

The four-part definition of CSR was originally published in 1979. In 1991, Carroll extracted the four-part definition and recast it in the form of a CSR pyramid. The purpose of the pyramid was to single out the definitional aspect of CSR and to illustrate the building block nature of the four part framework. The pyramid was selected as a geometric design because it is simple, intuitive, and built to withstand the test of time. Consequently, the economic responsibility was placed as the base of the pyramid because it is a foundational requirement in business. Just as the footings of a building must be strong to support the entire edifice, sustained profitability must be strong to support society’s other expectations of enterprises. The point here is that the infrastructure of CSR is built upon the premise of an economically sound and sustainable business.

At the same time, society is conveying the message to business that it is expected to obey the law and comply with regulations because law and regulations are society’s codification of the basic ground rules upon which business is to operate in a civil society. If one looks at CSR in developing countries, for example, whether a legal and regulatory framework exists or not significantly affects whether multinationals invest there or not because such a legal infrastructure is imperative to provide a foundation for legitimate business growth.

In addition, business is expected to operate in an ethical fashion. This means that business has the expectation, and obligation, that it will do what is right, just, and fair and to avoid or minimize harm to all the stakeholders with whom it interacts. Finally, business is expected to be a good corporate citizen, that is, to give back and to contribute financial, physical, and human resources to the communities of which it is a part. In short, the pyramid is built in a fashion that reflects the fundamental roles played and expected by business in society. Figure 1 presents a graphical depiction of Carroll’s Pyramid of CSR.

Fig. 1

Carroll’s pyramid of CSR

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Ethics permeates the pyramid

Though the ethical responsibility is depicted in the pyramid as a separate category of CSR, it should also be seen as a factor which cuts through and saturates the entire pyramid. Ethical considerations are present in each of the other responsibility categories as well. In the Economic Responsibility category, for example, the pyramid implicitly assumes a capitalistic society wherein the quest for profits is viewed as a legitimate, just expectation. Capitalism, in other words, is an economic system which thinks of it as being ethically appropriate that owners or shareholders merit a return on their investments. In the Legal Responsibility category, it should be acknowledged that most laws and regulations were created based upon some ethical reasoning that they were appropriate. Most laws grew out of ethical issues, e.g., a concern for consumer safety, employee safety, the natural environment, etc., and thus once formalized they represented “codified ethics” for that society. And, of course, the Ethical Responsibility stands on its own in the four part model as a category that embraces policies and practices that many see as residing at a higher level of expectation than the minimums required by law. Minimally speaking, law might be seen as passive compliance. Ethics, by contrast, suggests a level of conduct that might anticipate future laws and in any event strive to do that which is considered above most laws, that which is driven by rectitude. Finally, Philanthropic Responsibilities are sometimes ethically motivated by companies striving to do the right thing. Though some companies pursue philanthropic activities as a utilitarian decision (e.g., strategic philanthropy) just to be seen as “good corporate citizens,” some do pursue philanthropy because they consider it to be the virtuous thing to do. In this latter interpretation, philanthropy is seen to be ethically motivated or altruistic in nature (Schwartz and Carroll 2003). In summary, ethical motivations and issues cut through and permeate all four of the CSR categories and thus assume a vital role in the totality of CSR.

Tensions and trade-offs

As companies seek to adequately perform with respect to their economic, legal, ethical and philanthropic responsibilities, tensions and trade-offs inevitably arise. How companies decide to balance these various responsibilities goes a long way towards defining their CSR orientation and reputation. The economic responsibility to owners or shareholders requires a careful trade-off between short term and long term profitability. In the short run, companies’ expenditures on legal, ethical and philanthropic obligations invariably will “appear” to conflict with their responsibilities to their shareholders. As companies expend resources on these responsibilities that appear to be in the primary interests of other stakeholders, a challenge to cut corners or seek out best long range advantages arises. This is when tensions and trade-offs arise. The traditional thought is that resources spent for legal, ethical and philanthropic purposes might necessarily detract from profitability. But, according to the “business case” for CSR, this is not a valid assumption or conclusion. For some time it has been the emerging view that social activity can and does lead to economic rewards and that business should attempt to create such a favorable situation (Chrisman and Carroll 1984).

The business case for CSR refers to the underlying arguments supporting or documenting why the business community should accept and advance the CSR cause. The business case is concerned with the primary question – What does the business community and commercial enterprises get out of CSR? That is, how do they benefit tangibly and directly from engaging in CSR policies, activities and practices (Carroll and Shabana 2010). There are many business case arguments that have been made in the literature, but four effective arguments have been made by Kurucz, et al., and these include cost and risk reductions, positive effects on competitive advantage, company legitimacy and reputation, and the role of CSR in creating win-win situations for the company and society (Kurucz et al. 2008). Other studies have enumerated the reasons for business to embrace CSR to include innovation, brand differentiation, employee engagement, and customer engagement. The purpose for business case thinking with respect to the Pyramid of CSR is to ameliorate the believed conflicts and tensions between and among the four categories of responsibilities. In short, the tensions and tradeoffs will continue to be important decision points, but they are not in complete opposition to one another as is often perceived.

The pyramid is an integrated, unified whole

The Pyramid of CSR is intended to be seen from a stakeholder perspective wherein the focus is on the whole not the different parts. The CSR pyramid holds that firms should engage in decisions, actions, policies and practices that simultaneously fulfill the four component parts. The pyramid should not be interpreted to mean that business is expected to fulfill its social responsibilities in some sequential, hierarchical, fashion, starting at the base. Rather, business is expected to fulfill all responsibilities simultaneously. The positioning or ordering of the four categories of responsibility strives to portray the fundamental or basic nature of these four categories to business’s existence in society. As said before, economic and legal responsibilities are required; ethical and philanthropic responsibilities are expected and desired. The representation being portrayed, therefore, is that the total social responsibility of business entails the concurrent fulfillment of the firm’s economic, legal, ethical, and philanthropic responsibilities. Stated in the form of an equation, it would read as follows: Economic Responsibilities + Legal responsibilities + Ethical Responsibilities + Philanthropic Responsibilities = Total Corporate Social Responsibility. Stated in more practical and managerial terms, the CSR driven firm should strive to make a profit, obey the law, engage in ethical practices and be a good corporate citizen. When seen in this way, the pyramid is viewed as a unified or integrated whole (Carroll and Buchholtz 2015).

The pyramid is a sustainable stakeholder framework

Each of the four components of responsibility addresses different stakeholders in terms of the varying priorities in which the stakeholders might be affected. Economic responsibilities most dramatically impact shareholders and employees because if the business is not financially viable both of these groups will be significantly affected. Legal responsibilities are certainly important with respect to owners, but in today’s litigious society, the threat of litigation against businesses arise most often from employees and consumer stakeholders. Ethical responsibilities affect all stakeholder groups. Shareholder lawsuits are an expanding category. When an examination of the ethical issues business faces today is considered, they typically involve employees, customers, and the environment most frequently. Finally, philanthropic responsibilities most affect the community and nonprofit organizations, but also employees because some research has concluded that a company’s philanthropic involvement is significantly related to its employees’ morale and engagement.

The pyramid should be seen as sustainable in that these responsibilities represent long term obligations that overarch into future generations of stakeholders as well. Though the pyramid could be perceived to be a static snapshot of responsibilities, it is intended to be seen as a dynamic, adaptable framework the content of which focuses both on the present and the future. A consideration of stakeholders and sustainability, today, is inseparable from CSR. Indeed, there have been some appeals in the literature for CSR to be redefined as Corporate Stakeholder Responsibility and others have advocated Corporate Sustainability Responsibilities. These appeals highlight the intimate nature of these interrelated topics (Carroll and Buchholtz 2015). Furthermore, Ethical Corporation Magazine which emphasizes CSR in its Responsible Summit conferences integrates these two topics – CSR and Sustainability—as if they were one and, in fact, many business organizations today perceive them in this way; that is, to be socially responsible is to invest in the importance of sustainability which implicitly is concerned with the future. Annual corporate social performance reports frequently go by the titles of CSR and/or Sustainability Reports but their contents are undifferentiated from one another; in other words, the concepts are being used interchangeably by many.

Global applicability and different contexts

When Carroll developed his original four-part construct of CSR (1979) and then his pyramidal depiction of CSR (1991), it was clearly done with American-type capitalistic societies in mind. At that time, CSR was most prevalent in these more free enterprise societies. Since that time, several writers have proposed that the pyramid needs to be reordered to meet the conditions of other countries or smaller businesses. In 2007, Crane and Matten observed that all the levels of CSR depicted in Carroll’s pyramid play a role in Europe but they have a dissimilar significance and are interlinked in a somewhat different manner (Crane and Matten 2007). Likewise, Visser revisited Carroll’s pyramid in developing countries/continents, in particular, Africa, and argued that the order of the CSR layers there differ from the classic pyramid. He goes on to say that in developing countries, economic responsibility continues to get the most emphasis, but philanthropy is given second highest priority followed by legal and then ethical responsibilities (Visser 2011). Visser continues to contend that there are myths about CSR in developing countries and that one of them is that “CSR is the same the world over.” Following this, he maintains that each region, country or community has a different set of drivers of CSR. Among the “glocal” (global + local) drivers of CSR, he suggests that cultural tradition, political reform, socio-economic priorities, governance gaps, and crisis response are among the most important (Visser 2011, p. 269). Crane, Matten and Spence do a nice job discussing CSR in a global context when they elaborate on CSR in different regions of the globe, CSR in developed countries, CSR in developing countries, and CSR in emerging/transitional economies (Crane et al. 2008).

In addition to issues being raised about the applicability of CSR and, therefore, the CSR pyramid in different localities, the same may be said for its applicability in different organizational contexts. Contexts of interest here might include private sector (large vs. small firms), public sector, and civil society organizations (Crane et al. 2008). In one particular theoretical article, Laura Spence sought to reframe Carroll’s CSR pyramid, enhancing its relevance for small business. Spence employed the ethic of care and feminist perspectives to redraw the four CSR domains by indicating that Carroll’s categories represented a masculinist perspective but that the ethic of care perspective would focus on different concerns. In this manner, she argued that the economic responsibility would be seen as “survival” in the ethic of care perspective; legal would be seen as “survival;” ethical would be recast as ethic of care; and philanthropy would continue to be philanthropy. It might be observed that these are not completely incompatible with Carroll’s categories. She then added a new category and that would be identified as “personal integrity.” She proposed that there could be at least four small business social responsibility pyramids – to self and family; to employees; to the local community; and to business partners (Spence 2016). Doubtless other researchers will continue to explore the applicability of the Pyramid of CSR to different global, situational, and organizational contexts. This is how theory and practice develops.