The Market for Virtue

The Market for Virtue: The Potential and Limits of Corporate Social Responsibility

David Vogel
Copyright Date: 2005
Pages: 222
https://www.jstor.org/stable/10.7864/j.ctt1287b7x
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  • Book Info
    The Market for Virtue
    Book Description:

    The principles and practices of corporate social responsibility (CSR) date back more than a century, but the current wave of interest in this topic is unprecedented. This heightened attention is global and is evidenced on every conceivable measure. It is reflected in the growth of social and ethical investment funds, the dramatic increase in voluntary codes of conduct for companies and industries, and the number of companies that issue reports on their social and environmental practices and policies. Similarly, the mobilization of nongovernmental organizations to challenge a wide range of corporate environmental and human rights practices, the frequency of consumer boycotts and protests, and the number of organizations and institutions established to monitor, measure, and report on corporate social and environmental performance all demonstrate deep grassroots interest. In this book, David Vogel provides the first comprehensive, in-depth review of the contemporary CSR movement in both the United States and Europe. He presents a careful and balanced appraisal of the movement's accomplishments and limitations, including a critical evaluation of the business case for CSR. While acknowledging the movement's achievements, most notably in improving some labor, human rights, and environmental conditions in developing countries, he also demonstrates that CSR's potential to bring about a significant change in corporate behavior is exaggerated. The Market for Virtue explores to what extent future improvements in corporate conduct can occur without more extensive or effective government regulation -in the United States, Europe, the Far East, and in the developing countries. In other words, what is the long-term potential of business self-regulation? Vogel concludes that the amount of improvement that can be expected is far more modest than much contemporary writing on corporate responsibility has claimed. There is a market for virtue, but it is limited by the substantial costs of more responsible business behavior.

    eISBN: 978-0-8157-9773-9
    Subjects: Business

Table of Contents

  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-viii)
  3. Preface
    (pp. ix-xiv)
  4. CHAPTER 1 The Revival of Corporate Social Responsibility
    (pp. 1-15)

    What does it mean to be a virtuous company? Are companies becoming more virtuous? Is there a market for virtue? Consider some of the changes in business that have taken place since the beginning of the 1990s.

    —Nike, along with numerous other American and European firms that produce or sell apparel, footwear, sporting equipment, and toys, monitors working conditions in its supplier factories in developing countries.

    —Ikea requires its rug suppliers in India to prohibit the employment of children and provides families with financial assistance to help keep their children out of the labor market.

    —Starbucks, as...

  5. CHAPTER 2 Is There a Business Case for Virtue?
    (pp. 16-45)

    It is impossible to exaggerate the significance of the contemporary claim that there is a business case for corporate responsibility, business ethics, corporate citizenship, environmental stewardship, pollution control, sustainable development, and the like. To be sure, improving the bottom line is not the only possible reason for CSR. Many executives genuinely care about conducting their businesses in ways that are more environmentally sustainable, that respect human rights, and that foster economic development. Self-regulation can also reduce the likelihood of more government regulation or place a firm in a better competitive position if and when new regulations emerge. Some of the...

  6. CHAPTER 3 What Is the Demand for Virtue?
    (pp. 46-74)

    What are the foundations of the business case for corporate social responsibility? The best way to answer this question is by analyzing what drives it—namely pressure from consumers, workers, and investors. These are not the only forces driving business virtue, but they are among the most important. In principle, if most individuals’ decisions about what and where to buy, and where to work and to invest, were informed by how responsibly firms acted, then the market for virtue would work effectively: all companies would have a strong incentive to change their policies and practices in order to attract and...

  7. CHAPTER 4 Corporate Responsibility for Working Conditions in Developing Countries
    (pp. 75-109)

    Improving the conditions of factory and agricultural workers in developing countries has emerged as a major focus of contemporary corporate social responsibility. Since the 1990s more and more Western firms that market clothing, footwear, athletic equipment, and toys, as well as some other industrial goods and agricultural products, have been under pressure to accept responsibility for the working conditions of their suppliers. More than 1,000 companies have adopted codes of conduct establishing standards for child labor, wages, compulsory overtime, working conditions, and freedom of association. Numerous industry-specific codes govern the production of various products. A complex array of private organizations...

  8. CHAPTER 5 Corporate Responsibility for the Environment
    (pp. 110-138)

    Environmental management and practices are important and highly visible components of CSR. But in contrast to labor standards, where a rough consensus has emerged about how firms in developing countries that supply Western companies should treat their employees, the standards for corporate environmental responsibility are much less clear. Notwithstanding all that has been written about “environmental sustainability,” no one has been able to define or measure it satisfactorily.¹

    Environmental responsibility is complex and multidimensional. It encompasses corporate practices ranging from natural resource management and use to waste generation and disposal, recycling, the marketing of environmentally friendly products, and pollution prevention...

  9. CHAPTER 6 Corporate Responsibility for Human Rights and Global Corporate Citizenship
    (pp. 139-161)

    Improving the welfare of citizens in the developing countries where international firms do business is a critical dimension of CSR. Often associated with human rights, this dimension of corporate responsibility has gone beyond working conditions to encompass community development policies, relationships with repressive or corrupt regimes and their security forces, decisions about where firms should invest, the social and environmental impact of bank lending policies, and the establishment of norms of global corporate citizenship.

    As the salience of these issues has grown, a number of corporations, primarily in extractive industries, have found themselves targeted by activists because of their human...

  10. CHAPTER 7 Beyond the Market for Virtue
    (pp. 162-174)

    Since the 1990s, many major American and European manufacturers and retailers headquartered in the United States and Europe have adopted voluntary standards for labor conditions, environmental practices, and human rights. These new commitments have been institutionalized in corporate and industry codes, multi-stakeholder initiatives, and private standard-setting bodies, often with reporting and monitoring requirements. This complex web of “soft” law has constructed new social norms for several important dimensions of business conduct.

    The market for virtue, or civil regulation, has produced important changes in corporate practices, including:

    —a reduction in the employment of child labor and an improvement in health...

  11. Notes
    (pp. 175-206)
  12. Index
    (pp. 207-222)
  13. Back Matter
    (pp. 223-224)