Corporate Social Responsiveness: Choosing between Hierarchical and Contractual Control

• Published in: Journal of business ethics 1993-01, Vol.12 (1), p.27-35
• Main Author: Salbu, Steven R.
• Format: Article
• Language: English
• Subjects: Business ethics; Business management; Corporate governance; Corporate responsibility; Corporate social responsibility; Corporations; Cost efficiency; Decision making; Decision making models; Directors; Economic models; Effectiveness; Ethics; Implementations; Institutional investments; Liability; Organizational behavior; Outside directors; Pension funds; Profit motive; Profits; Shareholder meetings; Shareholders; Social change; Social ethics; Social policy; Social research; Social responsibility; Stakeholders; Stockholders; Strategic management; Strategic planning; Transaction costs
• ISSN: 0167-4544; 1573-0697
• DOI: 10.1007/BF01845783

Metaphors from strategic management can be applied effectively to business ethics programs. While effective strategies help implement ethical decisions that are formulated in good faith, ostensibly value-neutral control mechanisms can indirectly affect the substantive nature of policies and decisions themselves. This article examines the effectiveness of various corporate social responsibility implementation strategies. It also addresses the effects of implementation choices on the substantive formulation of ethical decisions and policies. Implementation and evaluation of corporate social responsibility programs through models of responsiveness are integrated into the social policy cycle using four tools: strategic control and performance control approaches, and hierarchical control and contractual control structures. The choices made among these forms of control approaches and structures, which as implementation mechanisms are typically considered to be value-free devices, may affect the substance of corporate social responsibility content. Hierarchical control structures, which use outside directors, tend to be associated with performance control approaches, and are biased towards applying utilitarian approaches to ethical decision making. Contractual control structures are compatable with strategic control approaches, and generally favor the application of principle-based approaches to ethical decision-making. Both the content and the quality of ethical decisions will be affected by differences between hierarchical and contractual control.