The Theory Of Corporate Social Responsibility - 7407 Words

Historical background of the development of CSR is almost as important as the ongoing discussion on what CSR is and how and where it should operate. Many scholars argue that these are not interchangeable and need to be assessed in conjunction with each other. For purposes of this paper it is pivotal to look into the past to see what stood behind the broadening of companies’ accountability beyond the standard agency theory (limited liability of shareholders for the company’s violations or breach and the company’s main accountability being towards its shareholders and investors only) to the stakeholder theory (company’s accountability towards a broad range of stakeholders, including employees, environment and local communities). The†¦show more content†¦This at the time was widely opposed by proponents of corporate isolation as a highly irrelevant research topic that went in no parallel or connection with the idea of a corporate veil, charter accountability and the sole purpose of any company to bring profits to its shareholders. This reverts us back to the development of a stakeholder theory that gradually gained its speed in the 1970s . It soon found its implementation in Freeman’s management discipline , who promoted the expansion of firms’ accountability towards a broader range of stakeholders. One of the examples of how attitude towards CSR by multinational corporations has changed was raised by Lee, when he reviewed corporate governance codes and practices of Ford . He used two instances in the history of corporate actions of Ford with an interval of 80 years in between them. Keeping in mind the abovementioned Clark’s remarks on corporate accountability back in 1916, this becomes even more educational, as it shows a dramatic change in shareholders’ perception of their business as a service to the broader society. There, in 1919 Ford was faced with a lawsuit, as a result of which it agreed to grant Dodge brothers their request to receive maximum dividends . The respective court decision was an indirect ridicule of Henry