Chandler, Strategic Corporate Social Responsibility, 5e
SAGE Publishing, 2020
Lecture Notes
Part IV: A Behavioral Perspective
Chapter 7: Markets and Profit
Strategic Corporate Social Responsibility (5e) is organized into six distinct parts, each with
two chapters and a case study. Each part presents CSR from a different perspective.
Together, they draw on core concepts and innovative models to provide a comprehensive
overview of CSR, as well as detailing the practical challenges faced by firms that grapple
with this complex topic across all aspects of operations. Throughout the book and its
accompanying instructor materials, useful teaching tools, contemporary examples, online
resources, and provocative questions for discussion and debate allow easy application in the
classroom.
Part IV presents a behavioral perspective on CSR that draws on much of what we know
about economic exchange and human psychology. The goal is to understand strategic CSR
within the constraints of the world (and in particular, human behavior) as it is, rather than as
we would like it to be.
Chapter Summary
Chapter 7 discusses the motivating role of profit in the broader discussion about capitalism
that emerged following the Financial Crisis, investigating the extent to which our current
market-based economic model should be reformed. It also challenges the common refrain
that firms have long focused on producing economic value and today must also produce
social value. In reality, there is no economic value and no social value; there is only value,
which the firm creates (or destroys) for each of its stakeholders.
Annotated Chapter Outline
1. Introduction
This section briefly frames the chapter by celebrating the central role of profit in
defining the value of a firm. While profit is not a perfect measure of value created
(externalities exist as a prime example of how all costs are not included in the price
charged to consumers), it is the best measure we have. To the extent that a strategic
CSR perspective is implemented throughout the firm (with stakeholders holding it to
account for its actions and all costs included in the final price), then that firm’s profit
will become an even more effective measure of the value it creates.
2. Markets
Chandler, Strategic Corporate Social Responsibility, 5e
SAGE Publishing, 2020
This section discusses in more detail how markets work and, as a result, why profit is
a reasonable measure of value created. The example of the T-shirt focuses this
3. Profit
This section demonstrates a fallacy that drives much of the CSR commentary—that
firms have long focused on creating economic value and, today, increasingly need to
4. Social Progress
The section concludes Chapter 7 by extending the pursuit of profit to nontraditional
Strategic CSR Debate
Motion: A company cannot be socially responsible unless it is profitable.
A strategic CSR perspective, in general, supports arguments in favor of this
motion. With all necessary provisos noted that the firm has to be acting legally,
the ability to make a profit indicates, by definition, that a firm is creating value for
many of its stakeholders. While more value can almost always be created and for
a broader range of stakeholders, the ability to make a profit is the best indication
we have that a company “deserves” to exist. Beyond this core assumption,
however, a nuanced perspective on this debate includes the qualifier that it is
profit over the medium to long term that identifies the truly value-creating firm,
while short-term profits can easily demonstrate a failure to create value for many
of the firm’s stakeholders.
Chandler, Strategic Corporate Social Responsibility, 5e
SAGE Publishing, 2020
Suggested Answers to Questions for Discussion and Review
1. How do you respond to the assertion that “the most important organization in
the world is the company: [It is] the basis of the prosperity of the West and the
best hope for the future of the rest of the world”? If not the company, what else?
A strategic CSR perspective agrees with this statement. The for-profit firm is the most
efficient mechanism we have created to convert scarce and valuable resources into
2. Why is it true to say that there is no economic value and no social value—there is
only value? What are the implications of this argument for the CSR community?
To put this another way—there is no “triple bottom line,” there is only the bottom line.
Firms create value for their stakeholders in many different ways, each of which can
3. Is it OK for a for-profit company to profit from poverty? Are there any limits to
the pursuit of profit? If so, how do we define them?
Absolutely. It is the profit-making process that creates value for stakeholders, broadly
defined. Those societies with the most vibrant private sector emerge out of poverty
4. Assuming a firm found a profitable niche selling a product to the 1 billion people
in the Level 1 income group (surviving on <$2 per day), how might such a
breakthrough help the firm sell to the one billion people in Level 4 (earning >$32
per day)?
The most innovative firms are those that continually analyze their operations and
5. Look at Unilever’s “Sustainable Living” site
(https://www.unilever.com/sustainable-living/). Before reading this chapter, were
you aware of this initiative? Does it change your impression of Unilever? Is this
plan CSR, or strategy, or both? Why?
An answer to this question will depend on the student’s perceptions or awareness of
Unilever prior to reading this chapter. In general, however, Unilever is probably the