Weighing in on the CSR Debate

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A recent Wall Street Journal op-ed recently provoked some controversy in our corner of the blogosphere: Aneel Karnani, a professor at the University of Michigan’s Ross Business School, laid out “The Case Against Social Responsibility.”

A Wall Street Journal op-ed recently provoked some controversy in our corner of the blogosphere: Aneel Karnani, a professor at the University of Michigan’s Ross Business School, laid out “The Case Against Social Responsibility.” Dr. Karnani claims that a for-profit company will never (and should never) make an impact-driven decision that flies in the face of its own interests. As he puts it:

“Very simply, in cases where private profits and public interests are aligned, the idea of corporate social responsibility is irrelevant: Companies that simply do everything they can to boost profits will end up increasing social welfare. In circumstances in which profits and social welfare are in direct opposition, an appeal to corporate social responsibility will almost always be ineffective, because executives are unlikely to act voluntarily in the public interest and against shareholder interests.”

This piece provoked energetic disagreement–examples are here, here and here–with several opposing arguments lobbed about what businesses should feel obligated to do in the name of Doing Good. But from my seat on the front lines of a social enterprise that exists to make impact, but is shaped by the imperative to be sustainable, the view is slightly different:  our success is based on twisting the question posed to for-profit companies entirely–not “will you compromise your profit margin to pay more to work with us because we’re doing something good?” but “how about we deliver the same high quality at the same cost as that for-profit player competing with us, plus use your dollars to make an impact?”

With 600+ employees relying on DDD for work and educational opportunity, we don’t have the luxury of pinning a sales strategy on corporate altruism. Regardless of what companies should do in the name of good citizenry, social enterprises such as DDD need to focus on what potential client companies will and won’t do now, and present a practical alternative.

In a way, this makes our clients’ decision “easy”, rather than forcing them to confront a more treacherous trade-off between making the right business decision or the right impact decision. But that doesn’t mean that we’re simply accepting and working within the confines of the current CSR paradigm–by successfully proving that doing well and doing good don’t have to be mutually exclusive, we continue to expand consciousness about the benefits of making an impact, shifting the paradigm toward a point where for-profit companies see social impact as something worth investing in in its own right.