Pyramid of CSR*

Duygu Turker, PhD

Yasar University
Selcuk Yasar Kampusu Universite Cad.
No:35-37 Agacli Yol
Bornova - Izmir
Turkey
turkerduy@yahoo.com

Synonyms
Carroll’s CSR Pyramid, Carroll’s CSR Domains, Four Dimensions of CSR

Definition
The pyramid of corporate social responsibility (CSR) is used to refer the famous model of Archie B. Carroll,
one of the distinguishing scholars in the literature. Building on his previous study in 1979, Carroll (1991)
developed a model of CSR that encompasses the entire range of business responsibilities as economic, legal,
ethical, and philanthropic dimensions. Carroll depicts his model as a pyramid, in which types of CSR
involvement are represented systematically at four levels. Although Carroll (1979) suggested that these four
levels of responsibilities must be met simultaneously, the practical implications of involvement might vary
among components. At the bottom of the pyramid, the goal of profit maximization that is accomplished
through the production of goods and services is conceptualized as the economic responsibilities of an
organization. According to Carroll (1991), this component indicates ‘the basic building block notion that
economic performance undergrids all else’. The legal responsibilities form the second layer of pyramid and
include all the activities to do business within a legal framework. As the third layer of pyramid, ethical
component draws the attention to conduct business based on ethical principles. The philanthropic CSR is
shown at the top of the pyramid and conceived as the general expectations of society with regard to a good
citizenship role for business organizations. As the name implies, philanthropic CSR requires the voluntary
involvement of businesses to improve the quality of human life and natural environment. The integrative
structure of pyramid briefly proposes that a ‘firm should strive to make profit, obey the law, be ethical, and be
a good corporate citizen’ (Carroll, 1991: 43). Although the literature is growing with new approaches and
theories, the pyramid of CSR still serves as a reference point for the debate of CSR.

Introduction
The concept of social responsibility has been one of the central ideas of business community for a long time.
Although the roots of concept can be traced back to the early management thoughts of practitioners and
scholars like Robert Owen, Chester Barnard and Theodore Kreps, it has gained its importance since the
1950s (Bowen 1953; Chase et al. 1950) and, to date, the diverse views in the literature contribute a lot to the
ongoing debate on CSR. Despite the existence of increasing criticisms, the growing number of organizations

*
Cite: Turker, D. (2013). Pyramid of CSR, pp.1962-1968. In Idowu, S.O.; Capaldi, N.; Zu, L.; Das Gupta, A.
(Eds), Encyclopaedia of Corporate Social Responsibility. Heidelberg: Springer.
has involved socially responsible activities during the last decades. Considering the popularity and variety of
CSR practices among businesses, it becomes critical to conceptualize CSR within a viable framework to
understand the relations between business and society. Archie B. Carroll is one of the most significant
contributors in the CSR literature with proposing a notion of CSR pyramid. In his framework, Carroll
basically tries to construct the responsibilities of a firm to its society. In their attempt for ‘mapping the
territory’ by grouping the main CSR theories and approaches in the literature, Garriga and Mele (2004)
classified the Carroll’s approach under the integrative theories, which focus on ‘how business integrates social
demands, arguing that business depends on society for its existence, continuity and growth’ (p.57). According
to the authors, in his earlier study, Carroll (1979) suggested the four domains of CSR. Then, he incorporated
this categorization into a pyramid (Carroll, 1991). Examining these two interrelated studies are critical to
understand how Carroll develops his approach on the pyramid of CSR.
Carroll builds the initial idea of his approach in one of his earlier studies. In this study, Carroll (1979)
proposed a conceptual model that elaborately describes the concept of corporate social performance (CSP).
This study explains CSR through addressing the entire range of a business’ obligations to a society. Carroll
synthesized the approaches of previous studies and suggested that CSR embodies the economic, legal, ethical,
and discretionary categories of business performance. As Figure 1 illustrates, his comprehensive framework
of CSR is ‘neither cumulative nor additive’; the components are ordered ‘to suggest what might be termed
their fundamental role in the evolution of importance’ (Carroll, 1979: 499-500). It can be noticed that the
structure of this framework incorporates the various stages in the evolution of business history. There are
emphasises on the economic role of business originated in early management thinking, as well as the social
involvement of modern organizations. Carroll (1979) stated that “the four classes are simply to remind us that
motives or actions can be categorized as primarily one or another of these four kinds” (p.500).

Figure1. Social Responsibility Categories

Source: Carroll, A.B. (1979, p.499).
In the second study, Carroll (1991) deepened his analysis on CSR with anticipating the interrelations among
CSR and stakeholders, and presented its components in a pyramid-shaped structure. He built his model on
his earlier thoughts, in which “CSR, to be accepted as legitimate, had to address the entire spectrum of
obligations business has to society, including the most fundamental – economic” (Carroll, 1991: 40). He
expanded the conceptual boundary of each component and, more importantly, the CSR categories given in
Figure 1 evolve into to a pyramidal structure (Figure 2).

Figure2. The Pyramid of Corporate Social Responsibility

Source: Carroll, A.B. (1991, p.42).
This pyramid provides a useful conception of CSR for both scholars and practitioners. When proposing his
model, Carroll (1991) intended to provide an integrated framework for particularly managers who want to
balance the interests of various stakeholders simultaneously. The components of this framework are given in
the following (Carroll, 1991: 40-43):
− Economic responsibilities: Historically, business organizations were created as economic entities
designed to provide goods and services to societal members. The profit motive was established as the
primary incentive for entrepreneurship. Before it was anything else, the business organization was the
basic economic unit in our society. As such, its principal role was to produce goods and services that
consumers needed and wanted and to make an acceptable profit in the process. At some point the
idea of the profit motive got transformed into a notion of maximum profits, and this has been an
enduring value ever since. All other business responsibilities are predicted upon the economic
responsibility of the firm, because without it the others become moot considerations.
− Legal responsibilities: Besides pursuing a profit motive, business is also expected to comply with the
laws and regulations promulgated by federal, state and local governments as the ground rules under
which business must operate. As a partial fulfilment of the ‘social contract’ between business and
society, firms are expected to pursue their economic missions within the framework of the law. Legal
responsibilities reflect a view of ‘codified ethics’ in the sense that they embody basic notions of fair
operations as established by our lawmakers. They are depicted as the next layer on the pyramid to
 portray their historical development, but they are appropriate seen as coexisting with economic
responsibilities as fundamental precepts of the free enterprise system.
− Ethical responsibilities: Although economic and legal responsibilities embody ethical norms about
fairness and justice, ethical responsibilities embrace those activities and practices that are expected or
prohibited by societal members even though they are not codified by law. Ethical responsibilities
embody those standards, norms, or expectations that reflect a concern for what consumers,
employees, shareholders, and the community regard as fair, just, or in keeping with the respect or
protection of stakeholders’ moral right.
− Philanthropic responsibilities [previously referred to as discretionary responsibilities]: Philanthropy
encompasses those corporate actions that are in response to society’s expectations that businesses be
good corporate citizens. This includes actively engaging in acts or programs to promote human
welfare or goodwill.
The graphical representation of framework might indicate the degree of an organization’s involvement into
the socially responsible activities. While economic and legal components are viewed as ‘required’ dimensions,
ethical and philanthropic components are usually seen as ‘expected’ and ‘desired’ dimensions, respectively
(Schwartz and Carroll, 2003). Therefore, this pyramidal structure might show in what extend an organization
accepts its responsibility to various stakeholders. The number of companies that involve into each
component usually decrease from the bottom to the top of the pyramid. As seen in Table 1, Carroll (1991)
explained what it means to have economic, legal, ethical and philanthropic responsibilities for an
organization. It can be noticed that the responsibilities under each component are strongly tied to the
theoretical framework.
Economic Components Legal Components Ethical Components Philanthropic Components
(Responsibilities) (Responsibilities) (Responsibilities) (Responsibilities)
It is important… It is important… It is important… It is important…
1. to perform in a manner 1. to perform in a manner 1. to perform in a manner 1. to perform in a manner
consistent with maximizing consistent with expectations consistent with expectations consistent with the
earnings per share. of government and law. of societal mores and ethical philanthropic and charitable
2. to be committed to being as 2. to comply with various norms. expectations of society.
profitable as possible. federal, state, and local 2. to recognize and respect 2. to assist the fine and
3. to maintain a strong regulations. new and evolving performing arts.
competitive position. 3. to be a law-abiding ethical/moral norms adopted 3. that managers and
4. to maintain a high level of corporate citizen. by society. employees participate in
operating efficiency. 4. that a successful firm be 3. to prevent ethical norms voluntary and charitable
5. that a successful firm be defined as one that fulfills its from being compromised in activities within their local
defined as one that is legal obligations. order to achieve corporate communities.
consistently profitable. 5. to provide goods and goals. 4. to provide assistance to
services that at least meet 4.that good corporate private and public educational
minimal legal requirements. citizenship be defined as doing institutions.
what is expected morally or 5. to assist voluntarily those
ethically. projects that enhance a
5. to recognize that corporate community’s “quality of life”
integrity and ethical behavior
go beyond mere compliance
with laws and regulations.
Table 1. Four Components of Corporate Social Responsibility
Source: Carroll, A.B. (1991, p. 40-41).

Pyramid of CSR has been interpreted many times in parallel to the evolution of CSR thinking since 1991. In a
recent study, Carroll (1999) made an overall assessment about how others perceive this four dimensional
framework and explained his point of view briefly: “many today still think of the economic component as
what the business firm does for itself, and the legal, ethical, and discretionary (or philanthropic) components
as what business does for others. Although this distinction is attractive, I would argue that economic viability
is something business does for society as well, although we seldom look at it in this way.” (Carroll, 1999: 284).
According to the author, a business organization produces goods and services to satisfy the needs and wants
of a society and makes a profit in return for its operations. Therefore, since businesses are fully embedded
into the economic system, the first component is not only related with businesses, but also affects the whole
society. However, this indirect effect of economic responsibility is usually neglected. Carroll also admits that
the economic component of pyramid is solely interpreted as the accomplishment of profit maximization goal.
It is clear that this component mainly focuses on the financial return of a company. As seen in Table 1, even
Carroll emphasises its effects on the organizational performance, rather than its social impact. Therefore,
most firms might easily recognize its economic responsibility as making profit only and ignore the rest of this
dimension. This narrow view makes the existence of economic component in CSR definition questionable.
Since these mentioned activities of a business (producing goods and services in return for a profit) might be
seen as a ‘core duty’ or ‘reason for existence’ for a business, rather than a ‘responsibility’, some authors tend
to exclude this component when defining CSR.
Despite the existence of some objections to the economic component of pyramid, there are some recent
attempts to explain this dimension with underlining its contribution to society. In their definitions, World
Business Council for Sustainable Development (WBCSD) and Commission of the European Communities
emphasize the aspect of ‘contributing to economic / sustainable economic development’ as an economic
component of CSR (Dahlsrud, 2006). Today, the contribution to the local economy has become a significant
part of sustainable supply chain management. In their sustainability and CSR reports, most multinational
companies (MNCs) begin to provide information about their contribution to the development of local
economies through purchasing from local producers. When considering the side effects of global or national
economic crises on particularly local economies, the economic component of CSR seems to be more
important in the recent decades.
According to Carroll, a business is also responsible to fulfil its economic mission within a legal framework.
However, as the second component of pyramid, legal component has provoked much academic debate as
well. In his study about the evolution of CSR, Carroll (1999) reviewed the various concepts and definitions in
the literature elaborately. In most of these definitions, CSR is seen as a concept that is beyond not only the
economic, but also the legal requirements of a firm. Although Carroll (1999) found the exclusion of legal
component as a ‘restricted definition of CSR’ (p.277), most people believe that a company must also obey
laws and these organizational efforts to meet legal requirements cannot be classified as a component of CSR.
Defining ethical dimension of pyramid is more problematic than explaining the first two components.
Although the changes on the ethical principles and values over time can be the significant driving forces to
form the legal framework of a society, there is usually no consensus among people on these newly emerging
standards of society; so, the ethical dimension is usually ‘ill-defined or continually under public debate as their
legitimacy’ (Carroll, 1991: 42). Considering its changing nature over time and among cultures, it is difficult for
a business to decide what it means to behave ethically. However, there are some universal standards of ethics
(like being fair and just or respecting the rights of stakeholders) that can guide to conduct business in
anywhere and anytime. Taking the dynamic relations between legal and ethical component into consideration,
a business should operate at the levels above that required by law (Carroll, 1991: 43). After the corporate
frauds of MNCs like Enron, WorldCom, Tyco, and Arthur Andersen in 2000, the ethical wrongdoings of
companies are increasingly under the inspection of public concern. Despite the importance of domestic
business ethics, global business ethics will demand ‘cutting-edge thinking and practice’, while companies
expand their operations throughout the world (Carroll, 2004). Therefore, in the era of globalization, a
universal conception of business ethics should be adopted by all companies.
Carroll (1991) admitted that his approach for the first three categories of pyramid overlaps the overall CSR
perspective of Friedman (1970). In his famous article in New York Times, Friedman (1970) first distinguished
the individual proprietors and corporate executives and then discussed the case of executives throughout the
article. According to Friedman (1970), since a corporate executive is an employee of shareholders in a free-
enterprise system, his or her only responsibility is “to make as much money as possible while conforming to
the basic rules of the society, both those embodied in law and those embodied in ethical customs” (p.173-
174). Although many people criticize his views on CSR, Friedman clearly accepts the economic, legal, and
ethical components. He rejects only the philanthropic component of Carroll’s CSR pyramid (Carroll, 1991:
43). Friedman and his proponents have provided some strong arguments against the philanthropic CSR.
However, in the last decades, the growing number of companies involves such activities to contribute to the
society in various ways.
As an overall assessment, the pyramid of CSR has been one of the most important frameworks that provide a
holistic view for CSR. Carroll (1991) stated that these components are not ‘mutually exclusive and are not
intended to juxtapose a firm’s economic responsibilities with its other responsibilities’ (p.43). When they are
taken separately, managers might see some conflicts between the economic responsibilities with other
components. However, Carroll (1991) suggested that such a narrow point of view might cause to oversimplify
the issue. Although the results of studies are still inconsistent, the increasing number of studies support that
CSR can positively affect the financial and non-financial performance indicators of an organization. In fact,
the non-financial indicators of organizational performance, like increasing organizational commitment of
current employees, attracting more competent job seekers, increasing customer loyalty, improving image of
organization etc. affect the financial performance in the long run. Considering both levels, the components of
CSR can be seen in an integrated manner. In a most recent evaluation, Carroll and Shabana (2010) stated that
“the four categories of CSR – economic, legal, ethical and philanthropic – address the motivations for
initiatives in the category and are also useful in identifying specific kinds of benefits that flow back to
companies, as well as society, in their fulfilment. Of course, these concepts can be overlapping and
interrelated in their interpretation and application, but they are helpful for sorting out the specific types of
benefits that businesses receive, and this is critical in building the ‘business case’.” (p.90).

Key Issues
Since pyramid of CSR has been one of the most frequently used conceptions among scholars, it is accepted as
‘a leading paradigm of CSR in the social issues in management field’ (Schwartz and Carroll, 2003: 504). One
of the underlying reasons of its acceptance is that it captures the CSR conception both on the theoretical and
practical levels. Considering the natural fit between the idea of CSR and an organization’s stakeholders
(Carroll, 1991: 43), pyramid of CSR provides a real picture of what people think about CSR during the
business history. According to Carroll and Shabana (2010), “whether in the definition’s structure or its
application, business performance with respect to the environment, stakeholders and society (social) are
captured along with the categories of economics and voluntariness (discretionary/philanthropic)” (p.90).
It might be expected that this framework is increasingly used to analyze the adoption of CSR among the
organizations of developing world. Although Carroll (1979) indicated that four kinds of responsibilities must
be met simultaneously, most organizations, particularly in the developing countries involve only the first
levels of model. Since it is a reason for existence for organizations, economic responsibilities has been
considered by all organizations. However, Carroll (1991) stated that organizations begin to adopt the ethical
and philanthropic dimensions of CSR since the beginning of the 1990s.
Future Directions
The evolution of CSR literature has stimulated the development of alternative approaches. In a recent study,
Schwartz and Carroll (2003) re-examined the model to determine whether it can be modified or improved. In
this study, the authors proposed an alternative approach based on three core domains (economic, legal and
ethical responsibilities) and a Venn model. The model yields seven CSR categories resulting from the overlap
of the three core domains as purely economic, purely legal, purely ethical, economic/ethical, economic/legal,
legal/ethical, economic/legal/ethical. On the other hand, in his study, Dahlsrud (2006) extracts the
dimensions of CSR based on a content analysis of 27 CSR definitions – including the diverse definitions of
academic, practitioner and quasi-practitioner. Using the frequency counts from Google, the author indicates
that the environmental, social, economic, stakeholder and voluntariness dimensions are invoked most
frequently dimensions during this time span (Dahlsrud, 2006). Although Carroll and Shabana (2010) criticized
the study due to its methodology and lack of validity, these five dimensions of CSR can clearly incorporate
the economic, environmental and social dimensions of sustainable development. CSR is surely one of the
most vogue and evolving concepts of business literature. Therefore, more studies need to be done to
conceptualize of CSR in the future. However, none of the future studies neglect the invaluable contribution
of CSR pyramid in the conception of CSR.

Cross-References
→ Archie B. Carroll
→ Corporate social performance
→ Corporate social responsibility
→ Philanthropic CSR
→ Supply chain management
→ Sustainable development
→ World Business Council for Sustainable Development

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