Apple

DEFINITION

Corporate Social Performance (CSP) can be defined as ‘a business organization’s con- figuration of principles of social responsibility, processes of social responsiveness, and policies, programs, and observable outcomes as they relate to the firm’s societal relation- ships’ (Ruf, Muralidhar, and Paul, 1998, p. 120).

Agency theory

According to Ross, agency theory proposes that during a transaction, one transactor (the principal) designates another person (the agent) to act on his or her behalf. This requires the principal to trust the agent under imperfect information and uncertain outcomes (Ross, 1973, p. 134). Friedman (1970) draws on agency theory in his criticism of CSR, explaining that managers, as agents for the owners of the firm, have a responsibility to maximise the

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corporation’s profits; to spend money doing anything else is an abuse of the relationship. However, Carroll (1979) points out that the economic and societal interests of the firm are often intertwined; for example, product safety is of concern both at the economic and societal levels. Therefore, practicing CSR may be in the best economic interests of the firm.

Stakeholder theory

Cheit (1964) identified the New Deal as the impetus for the development of stakeholder theory. While previously only the effects of corporate actions on actual shareholders were considered, Freeman and Reed developed the theory that there are other groups whose needs should be considered as well, adding employees, customers, and society at large, among others, to the list of a firm’s constituents: ‘There are other groups to whom the corporation is responsible in addition to stockholders: those groups who have a stake in the actions of the corporation’ (Freeman & Reed, 1983, p. 89). Donaldson and Preston (1995) justify the stakeholder theory of the firm from descriptive, instrumen- tal, and normative viewpoints. Clearly, since society at large and subgroups of society...