The Origins of Corporate Social Responsibility
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THE ORIGINS OF CORPORATE SOCIAL RESPONSIBILITY
Eric C. Chaffee*
I. INTRODUCTION
Corporate social responsibility has never been more important. In
recent years, the impact of corporations upon our world has become
undeniable. However, the reasons that corporations should engage in
socially responsible behavior remain murky. This is because the
essential nature of the corporate form is not well understood.
The management of most corporations feels some obligation to
undertake activities that are socially responsible. Two justifications are
commonly offered by corporate managers for undertaking such
behavior. First, some managers argue that engaging in such behavior is
appropriate because it is good for business, and second, some managers
argue that engaging in such behavior is the right thing to do.
In regard to socially responsible behavior being appropriate because it
can be good for business, this justification is well established and has a
strong legal basis. As held in the classic case Dodge v. Ford Motor Co.,
for-profit corporations must be run to produce a profit.' Case law has
established that socially responsible activities are permissible when they
2
serve a business purpose.
This fails, however, to explain why corporations ought to engage in
such activities except when it facilitates profit maximization. For
example, if management is asked to choose between two courses of
action, one that is socially responsible and the other that is not, and if
both courses of action would generate the same amount of profit, most
corporate managers would be unable to articulate why they should
* Professor of Law, The University of Toledo College of Law; J.D., University of Pennsylvania
Law School; B.A., The Ohio State University. This Essay benefited from discussions with scholars too
numerous to mention. I would like to offer special thanks to Professors Felix B. Chang, William E.
Foster, Stefan J. Padfield, Elizabeth Pollnan, and Lee Strang for providing feedback and advice that
greatly contributed to this Essay. I would also like to thank Christine Gall, Esq. for her encouragement
while drafting this work. This project was supported by a summer research grant from The University
of Toledo College of Law. The views set forth in this essay are completely my own and do not
necessarily reflect the views of any employer or client either past or present.
1. Dodge v. Ford Motor Co., 170 N.W. 668, 684 (Mich. 1919) (A business corporation is
organized and carried on primarily for the profit of the stockholders. The powers of the directors are to
be employed for that end.).
2. See Franklin A. Gevurtz, Getting Real About Corporate Social Responsibility: A Reply to
Professor Greenfield, 35 U.C. DAvIs L. REv. 645, 650 (2002) ([B]y and large, courts have not
scrutinized business decisions to see whether directors sacrificed profit maximization to advance the
interests of employees, creditors, customers, and the community. Instead, the courts almost invariably
accept some rationale as to how the business decisions were in the long-range interest of the
shareholders.).
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The Origins of Corporate Social Responsibility
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