Executive Perceptions

of Corporate Social Responsibility

Interviews with officers of large corporations indicate a signifi-
cant change in executive opinions on social responsibility and
the outcomes of social involvement over the past five years.

SANDRA L. HOLMES

Sandra L. Holmes is a faculty m e m b e r in management at the business-related activities. Business organiza-

University o f Texas at San Antonio.
The idea that private business enterprises are
responsible for attending to the needs of
society is hardly new. Such an expectation is
a Western tradition with a documented his-
34 tory of at least 2,000 years. Yet the emphasis
on corporate social responsibility which has
characterized business literature since 1960
indicates that the concept is indeed contro-
versial. While most observers concur that
businesses have social responsibilities, con-
siderably fewer are in agreement as to the
nature of these responsibilities. A review of
the literature reveals three major philosophies
concerning business responsibility. These phi-
losophies might be called the classical view,
the managerial view and the public view.
The classical view, which dominated the
nineteenth century, isolated business activities
and business organizations from other kinds
of activities and organizations. 1 The same
individuals might be involved in both business
and nonbusiness affairs, but they were subject
to different standards of behavior in their
NOTE: The author thanks Dr. Bumard H. Sord for his
contributions to this article. The field research was partially
financed by a grant from the Dora Bonham Memorial Fund.
1. James W. McKie, "Changing Views," in Social Respon-
sibility and the Business Predicament, ed. James W. McKie
(Washington, D. C.: The Brookings Institution, 1974), pp.
18-19.
tions and businessmen were not expected or
encouraged to serve the same goals as other
organizations in a pluralistic society, and the
goals of business were relatively clearcut.
According to the classical view, the pri-
mary criteria of business performance are
economic efficiency and growth in the pro-
duction of goods and services. Perhaps the
most discussed aspect of the classical view is
the idea that the primary goal and motivating
force for business organizations is profit. The
firm seeks to make as large a profit as it can,
and such profits are limited to reasonable
levels only by market competition. In pur-
suing its own self-interest, therefore, the firm
is also operating through the market mecha-
nism in the public interest.
The classical view is, in essence, little more
than Adam Smith's "invisible hand.'" Smith
contended that the pursuance of self-interest
was the most effective way that a business-
man could enhance the public good and even
remarked that he had " . . . never known
much good done by those who affected to
trade for the public good. ''2
The managerial view of business responsi-
bility, which probably had its beginnings in
the 1930s and was described in 1956 by
2. Adam Smith, The Wealth o f Nations, book 4 (New
York: Modem Library, 1937), p. 423.

BUSINESS HORIZONS
Executive Perceptions o f Corporate Social Responsibility
Frances X. Sutton, has most relevance in the
large corporation. 3 The essence of this view is
that managers of large corporations are re-
sponsible for balancing the claims and rights
of many diverse g r o u p s - a m o n g them em-
ployees, customers, suppliers and the local
plant c o m m u n i t y - r a t h e r than enhancing the
wealth of shareholders. The managerial view
allows for and encourages conscious effort by
business managers in promoting, the public
good.
A more recent position concerning busi-
ness responsibility, which could be called the
public view, is perhaps best illustrated in the
writings of Ralph Nader and J o h n K. Gal-
braith. Large corporations exercise enormous
power over the lives of all members of
society, and Galbraith has said that "Where
the public i n t e r e s t . . , is at issue, there is no
natural right to be left alone. ''4 Whatever is
needed to insure that business operates in
h a r m o n y with the public i n t e r e s t - w h e t h e r it
be public ownership of certain industries,
federal chartering of corporations, or more
stringent government regulation of private
enterprise-would be advocated under the
public view.
Certainly the pivotal figure in the area of
social responsibility is the corporate execu-
tive. While several recent empirical investiga-
tions have provided some data about the
corporate executive's view of social respon-
sibility, the information available does not yet
assemble into a coherent framework. Harlan
C. Van Over and Sam Barone noted that
executives do not see themselves as the alter
egos of the shareholder, that personal values
and the Christian ethic are the most impor-
tant factors in motivating executives toward
social activities, and that two factors which
lessen motivation are the inefficiency and
3. Frances X. Sutton et al., The American Business
Creed (Cambridge: Harvard University Press, 1956), pp.
57-58.
4. John K. Galbraith, "On the Economic Image of
Corporate Enterprise," in Corporate Power in America, eds.
Ralph Nader and Mark Green (New York: Grossman Pub-
lishers, 1973), p. 7.
JUNE 1976
waste associated with the administration of
social p r o ~ a m s and the lack of time and
m o n e y to devote to social projects, s
J o h n W. Collins and Chris G. Ganotis
found in a study of one organization that
lower-level managers may be less supportive
of corporate social efforts than are higher-
level executives and that younger managers
(under forty years of age) evidenced less
belief than did older managers that corporate
commitment is necessary to help solve social
problems. 6
A third study, the Louis Poll, identified
social problems which executives believed
should be given top priority and revealed that
m a n y executives felt that business had to
make an "adequate" profit before assuming
social responsibilities which may not be prof-
itable. 7
SELECTING THE SAMPLE
35
This article, reporting the results of a study of
the corporate executive's attitudes and opin-
ions concerning the social responsibility of
the corporation, presents the following infor-
mation:
how executives perceive that their own opinions
and the philosophies of their firms concerning social
responsibility have changed over the past five-year
period (1970-75), and what future changes they
affticipate
the positive and negative outcomes which the
executives believe will result from the kinds of social
involvement practiced by their firms
the factors which most heavily influence the
firm's selection o f areas for social involvement
how close the executives perceive the relationship
to be between general economic conditions and the
level of corporate social effort
executive opinions as to whether business can be a
major force in the alleviation of social problems.
5. Harlan C. Van Over and Sam Barone, "An Empirical
Study of Responses of Executive Officers of Large Corpora-
tions Regarding Corporate Social Responsibility," Academy
o f Management Proceedings (1975), pp. 339-341.
6. John W. Collins and Chris G. Ganotis, "Is Corporate
Responsibility Sabotaged by the Rank and File?" Business
and Society Review/Innovation (Autumn 1973), pp. 82-8S.
7. Arthur M. Louis, "View from the Pinnacle: What
Business Thinks," Fortune (September 1969), pp. 92-95.
 Sandra L. Holmes

TABLE 1
Executives' Opinions and Firms' Philosophies about the Social
Responsibilities of Business: 1970, 1975 and 1980
Percent o f Executives Who
Percent o f Executives Who Selected Statement
Selected Statement to Describe Their
to Describe Their Opinion Firm "s Philosophy
1970 1975 1980" 1970 1975 1980~

Business is responsible for making a

profit and abiding b y legal regulations 13.' .f .6 17.4~ 2.~ 1.7

Business is responsible for making a

profit and helping to solve social prob-
lems which business m a y directly
create (such as pollution). 23.] 16.1 9.6 27.5 17.1 7.8

In addition to making a profit, business Change Change

should help to solve social problems 1970-75 1970-75
w h e t h e r or n o t business helps to create sig~ sig.
those problems: .0Ol .001

(1) as long as there is at least some

short-run or long-run profit potential. 24.2 23.5 21.9 21.3 26.~ 26.7
(2) even if there is probably no short- Change Change
r u n or long-run profit potential. 31.1 46.4 1975-80 46.6 28.1 41.2 1975-80 46.1
not sig. sig.
(3) even t h o u g h doing so m a y reduce .10 .10
short-run profits and no long-run
36 ¸ profit returns are possible. 8.[ 13.9 21.3 5.7 12.' 17.7

Number o f responses 182 188 180 i78 181 180

* Predicted opinion
tPredicted philosophy
NOTE: A chi-square test was used to determine w h e t h e r two distributions differed significantly.

The field research was initiated May 2,
1975, by mailing questionnaires to top execu-
tives in 560 firms randomly selected from the
800 firms listed in the 1974 F o r t u n e direc-
tory of the 500 largest industrial corporations
and the 50 largest firms in each of the
categories of commercial banking, life insur-
ance, diversified financial, retailing, transpor-
tation and utilities. The addressee sample was
proportionately stratified so that question-
naires were mailed to 350 of the largest 500
industrial firms and to 35 of the 50 firms in
each of the remaining six categories. Com-
pleted questionnaires were returned b y 192
firms, or 34% of the sample, and many
companies sent letters and pamphlets which
described their social efforts. The 192 firms
responding constituted 24% of the 800-firm
population. The combined assets of the re-
sponding firms accounted for about 51% of
all the assets of the 800-company population
in 1974 and for about 35.5% o f the persons
employed b y the 800 firms.
SOCIAL RESPONSIBILITY AND PROFITS
In an effort to uncover trends in attitudes
toward the social role of the corporation, the
respondents were asked to consider five state-
ments about social responsibility, which are
shown in Table 1 in the form of a crude
Likert-type scale. They were asked to select
the one statement which they believed best
described their own opinions in each of the
years 1970 and 1975 and also to select the
one statement which they believed was most
likely to be closest to their own opinions in

BUSINESS HORIZONS
Executive Perceptions of Corporate Social Responsibility
1980. Finally, the executives were asked to
select the one statement which they believed
would be most representative of their firm's
philosophy in each of the same three years.
As shown, part (2) of the third statement,
that "In addition to making a profit,
business should help to solve social problems
whether or not business helped to create
those p r o b l e m s - e v e n if there is probably n o
short-run or long-run profit potential," was
chosen by the largest percentage of executives
in all three time periods. Taken as a group,
however, they perceived that their own opin-
ions, as well as the philosophies of their firms,
had changed significantly over the past five-
year period from 1970 to 1975. They did not
anticipate equally significant changes during
the next five-year period from 1975 to 1980,
but it does appear that a growing number of
executives believe that social involvement is
necessary, even though short-run profit re-
turns are reduced and no long-run returns are
probable.
No statistically significant variation in
executive and corporate philosophies in the
three time periods (1970, 1975 and 1980)
was found to be attributable to the effects of
the following moderator variables: title of the
executive completing the questionnaire, in-
dustrial classification of the firm, number of
employees in the firm, and amount of assets
of the firm.
OUTCOMES OF SOCIAL INVOLVEMENT
Observers have suggested certain benefits that
businessmen may be hoping to obtain by
accepting more social responsibility, such as
preservation of the enterprise, increased long-
run profitability and stability, improving the
business environment, or forestalling govern-
ment regulation. This investigation put a
number of these hypotheses to the test.
JUNE 1976
The executives were asked to consider two
lists o f outcomes, all of which are sometimes
said to result from corporate social involve-
ment. The first list consisted of outcomes
which are generally viewed as positive from
the corporate standpoint, while the items on
the second list were more likely to be
considered as negative outcomes or at least as
difficulties to be overcome. The executives
were asked to indicate all those outcomes
which they believed were likely to result from
the kinds of social involvement practiced by
their firms.
As indicated in summary form in Table 2,
there was considerably more agreement on
positive outcomes of corporate social involve-
ment than on negative outcomes. Almost
every respondent believed that corporate rep-
utation and goodwill would be enhanced, and
a large percentage believed that the social
and economic systems would be strengthened 37
by corporate social involvement. More tangi-
ble results, such as gaining customers, in-
creased profitability and preferential treat-
ment by investors, were thought to be less
likely.
The positive outcomes of corporate social
involvement thought probable b y executives
did not vary significantly by the title of the
respondent, industrial classification o f the
firm, number of employees in the firm, or
amount of assets of the firm, with the
following exceptions:
Lower-level executives were more likely
than higher-level executives to believe that
additional government regulation could be
avoided.
Executiws in wholesale and retail firms
were most likely to believe that the pluralistic
nature Of American society would be
stren~hened, while manufacturing executives
were least likely to think this outcome proba-
ble.
Executives in oil, gas and mining firms

TABLE2
Outcomes Which Executives Expected from
the Social Involvement of Their Firms
Percent
Expecting
Positive Outcomes
Enhanced corporate reputation
and goodwill
Strengthening of the social
system in which the
corporation functions
Strengthening of the economic
system in which the
corporation functions
Greater job satisfaction
among all employees
Avoidance of govern-
ment regulation
Greater job satisfaction
among executives
Increased chances for survival
of the firm
38 Ability to attract better
managerial talent
Increased long-run profitability
Strengthening of the pluralistic
nature of American society
Maintaining or gaining customers
Investors will prefer socially
responsible firms
Increased short-run profitability
Negative Outcomes
Decreased short-run profitability
Conflict of economic or financial
and social goals
Increased prices for consumers
Conflict in criteria for assessing
managerial performance
Disaffection of stockholders
Decreased productivity
Decreased long-run profitability
Increased government regulation
Weakening of the economic
system in which the
corporation functions
Weakening of the social
system in which the
corporation functions
Sandra L. Holmes
were more likely than executives in other
industries to anticipate increased short-run
profitability.
The negative outcomes of corporate social
involvement believed probable by executives
did not vary significantly by title of the
respondent, industrial classification of the
firm, number of employees in the firm, or
97.4 amount of assets of the firm, with only one
exception: Increased government regulation
89.0 was more often thought probable among top
level executives (such as chairmen, presidents
and vice-presidents) than among lower-level
74.3 executives.
72.3
63.7 SELECTING AREAS FOR INVOLVEMENT
62.8 In an effort to fill the void of information
about how the corporation selects from
60.7 among the various social demands those to
which it will respond, the executives were
55.5 asked to rank the factors which most heavily
52.9 influenced their firm's selection of areas for
social involvement. The factors are shown in
40.3
Table 3 according to how they were ranked.
38.2
The data indicate that the seriousness of a
36.6 social need and the special competencies of a
15.2 corporation to be involved in a certain area or
areas are highly influential factors. It is
interesting that over 50% of the respondents
59.7 denied that government pressure was influ-
ential in the selection of areas for social
53.9 involvement, and the profitability to the
41.4 corporation of a social venture was not found
to be particularly influential.
27.2 The rankings a s s i ~ e d to each factor did
24.1 not vary significantly b y title of the respon-
18.8 dent, industrial classification of the firm, or
13.1 by number of employees or assets of the firm,
11.0 with one exception: The profitability of the
venture appeared to be least important to
executives in transportation, communication,
7.9
and utility firms and relatively more impor-
tant to executives in financial, insurance and
3.7 real estate firms.
BUSINESS HORIZONS
Executive Perceptions of Corporate Social Responsibility

TABLE 3

Factors in the Selection of Areas for Social Involvement, as

Ranked b y Executives
Percent Percent Percent
Ranking Factor Ranking Factor Reporting
Factor 1-3 4-10 N o t a Factor

Matching of a social need to corporate

skill, need, or ability to help 70.7 12.5 16.8
Seriousness of social need 53.4 22.0 24.6
Interest of top executives 47.6 30.9 21.5
Public relations value of social action 20.9 44.0 35.1
Government pressure 20.9 28.8 50.3
Pressure of general public opinion 20.4 35.6 44.0
Pressure from special interest groups 13.1 33.5 53.4
Amount of corporate effort required 12.1 36.1 51.8
Measurability of results, or some form
of cost/benefit analysis of social effort 12.0 29.8 58.2
Profitability of the venture 9.4 17.3 73.3
SOCIAL ACTIVITY AND THE ECONOMY firms and executives in wholesale and retail 39
firms reported their firms' social involvements
The executives questioned perceived that the to be relatively more dependent upon the
level of corporate social expenditures was not economic situation than did executives in the
completely determined b y the general econo- other industrial g o u p s . Also, executives in
mic situation. In response to the question "To firms with lesser assets reported a ~ e a t e r
what d e ~ e e is your firm's level of social dependency upon the economic situation
involvement determined b y the economic than did executives in firms with greater
situation; that is, more involvement in times assets. Responses did not vary significantly b y
of prosperity and less involvement in times of title of the respondent and b y number of
generally adverse conditions?" only 4.7% indi- employees in the firm.
cated "very heavily," 15.6% "heavily," 71.9%
"partially," and 7.8% indicated "not at all."
A number of respondents expressed the feel- BUSINESS AS A SOCIAL FORCE
ing that "social problems can't wait until it is
financially convenient to deal with them." Because of the often expressed opinion that
Others, however, explained that contributions fragmentation of efforts and economic limita-
were directly related to profits and that profit tions severely restrict business's potential as a
performance determined the availability of major force in the alleviation of social prob-
funds and the level of social expenditures. lems, the following question was asked: "To
Responses concerning the relationship be- what extent do y o u agree with the statement
tween the economic situation and the level of that 'Business possesses the ability and means
corporate expenditures did vary significantly to be a m a j o r force in the alleviation of social
b y industry and b y assets. Executives in problems'?" The executives appeared to be
transportation, communication and utility highly optimistic about business's social role:

JUNE 1976
 Sandra L. Holmes

37.6% agreed strongly, 40.7% agreed more
than they disagreed, 20.1% disagreed more
than they agreed, .5% disa~eed strongly and
1.1% had no opinion. A few respondents
labeled this question as purely academic,
saying that business is already a major force.
Others said that although business could be a
force, it was perhaps not a major one for
some of the most pressing social ills, such as
the rising crime rate or drug abuse problems.
Several other executives, however, wondered
how we in this country ever came to believe
that private enterprise, with funds coming
from the investor to the extent that he or she
is willing to pay, could be expected to do
what the government, with the power to tax,
has not been able to do.
Executives in finance, insurance and real
estate firms and executives in transportation,
communication and utility firms agreed most
40 strongly that business can be a major force in
the alleviation of social problems. Executives
in oil, gas and mining companies and manu-
facturing companies agreed least strongly.
Responses did not vary significantly by title
of the respondent, number of employees in
the firm and amount of assets of the firm.
1~1 A significant change in executive
opinions and corporate philosophies
of social responsibility has occurred over the
past five-year period. Executives anticipated
more positive than negative outcomes from
the social efforts of their firms, and almost all
executives believed that corporate reputation
and goodwill would be enhanced through
social endeavors. Factors relating to the spe-
cial competencies of the corporation and the
seriousness of a social need were believed to
be the most influential in the selection of
areas for corporate social involvement. The
majority of executives were optimistic about
the ability of businesses to alleviate social
problems and believed that the level of
corporate social ~~efforts was only partially
determined by general economic conditions.

l i ~ m I I ~ I ~ I i I ~ I ~ i I I ~ I ~ j ~ I ~ i ~ R I i ~ = ~ I ~ i I ~ I I ~ D I ~ I ~ I I I i I A ~ i I i I

"The climate for strengthening the hand of the buyer has altered
dramatically in a few short years. It has dawned upon politicians and
consumers alike that the incredible flood of technical abundance pouring
from the country's mills and factories is posing problems to society which
the laws and institutions must deal with, as they must with the cancer of
urban blight and with the unemployed. What has also changed is that the
people who are pointing to the problems are advocates and not reformers.
Muckraking anti-business tracts of yesteryear have been replaced in large
part b y the reasoned pleas of concerned individuals that enlightened selling
practices are just as much in the best interest of corporations as they are of
the consumer."

--James Bishop, Jr. and Henry W. Hubbard

L e t the Seller B e w a r e

BUSINESS H O R I Z O N S