‘Implicit’ and ‘Explicit’ CSR:
A conceptual framework for understanding CSR in Europe

Dirk Matten
University of London

Jeremy Moon
University of Nottingham













Address for correspondence:

Professor Dirk Matten
Chair in Business Ethics
Director, Centre for Research Into Sustainability (CRIS)
School of Management, Royal Holloway
University of London

Egham, Surrey, TW20 0EX
England
Email dirk.matten@rhul.ac.uk
Phone +44 1784 414018
Fax +44 1784 439854

---

‘Implicit’ and ‘Explicit’ CSR:

A conceptual framework for understanding CSR in Europe



Abstract

This paper presents a conceptual framework of corporate social responsibility (CSR) prompted
by the need to understand its changing status in Europe. It is informed by questions concerning
(i) the extended period in which European corporations did not appear to match their American
counterparts and (ii) the more recent and relatively rapid rise in CSR in Europe. It illustrates the
comparative differences in CSR with reference to three areas of CSR and explains with reference
to key differences in the European and American national contexts. It offers and justifies the
distinction between ‘explicit’ (American) and ‘implicit’ (embedded in broader norms and
regulation) CSR and posits that national CSR systems will be a function of the intensity of the
institutional framework and the salience of social issues to individual corporations. The
significance of these variables for current trends in European CSR is fleshed out with the aid of
the concepts of national business systems and new institutionalism.

2

---

INTRODUCTION
This paper conceptualizes the notion of ‘corporate social responsibility’ (CSR) beyond the
economic, social and political context of its American origins by investigating the changing
manifestations of the social responsibility of business in Europe. By Europe, we refer only to the
democratic and capitalist systems, initially of Western Europe and Scandinavia, more recently of
Southern Europe and only latterly of Eastern Europe. As these countries share the most basic
political and economic characteristics with the USA (i.e. democratic capitalism) there is clearly
an explanatory puzzle for their differing historic profiles of CSR.

In this context, the paper starts from the empirical observation that CSR has gained
unprecedented momentum in Europe in recent years. There is ample evidence for this recent
growth of interest in CSR within European industry, politics and academia. We confine
ourselves to just a few examples. First signs were in the UK in the 1980s with the emergence of
the major business coalition, ‘Business in the Community’1 (BITC). But this is not simply a
story of Anglo-Saxon emulation of America as illustrated by the foundation of ‘CSR Europe’2 in
1996, an industry organisation to coordinate, foster and promote the implementation of CSR in
European companies. Later the European Commission issued a couple of initiatives to foster the
concept of CSR in its member countries and provide a platform for a common understanding
(coincidentally countries which retained some vestiges of civil society through the periods of
communism - see Commission of the European Communities, 2001, 2002). Finally, on a more
academic level, the ‘European Academy of Business in Society (EABiS)’3, a multi-stakeholder
organisation focusing particularly on the mainstreaming of CSR in business education and
research, was founded in 2002.


3

---

This paper is stimulated by two questions directly related to this recent surge in CSR in Europe.
First, this development raises the question whether, if CSR has only now entered the public
debate in Europe, does this mean that, hitherto, corporations in Europe were oblivious to their
social irresponsibility? The second question we address is more positive: if ‘CSR is an idea
whose time has come’, as even sceptics such as Martin Wolff, Chief Economics Correspondent
of the Financial Times commented (Wolff, 2002: 62), why has this concept entered the agendas
of European business, politics and academia so much later than those of the USA and other parts
of the world?

We discuss these questions in the following ways. We will identify key elements of the CSR
concept in the way it was featured in the original, that is US-American, context (section 2). In the
following section we will empirically compare how issues addressed by CSR in the USA have
been addressed in Europe (section 3). Based on these empirical examples and reflecting a broader
body of empirical comparative research we will then develop a conceptual framework of CSR
which reflects both the original US-American approach as well as the European take on issues of
the corporate responsibility for societal issues (section 4). Based on this conceptual framework
we will delineate further avenues of research in CSR which relate back to both key questions
asked above (section 5). On the one hand we argue that our conceptualization allows for research
into different societal views and institutional manifestations of CSR, on the other hand we
suggest our framework as a research perspective on reasons for the increasing global proliferation
and acceptance of CSR as a important area of business practice, policy initiative and academic
research and teaching. Finally we will discuss some implications and adumbrate a few caveats of
the proposed framework (section 6).


4

---

WHAT IS CSR?
Despite a vast and growing body of literature on the concept of CSR (e.g. Carroll, 1979, 1991,
1999) and related concepts (Clarkson, 1995; Swanson, 1995; Wartick & Cochran, 1985; Wood,
1991) defining CSR is not as easy as it might at first appear (Garriga & Melé, 2004). First, we
argue that CSR is an ‘essentially contested concept’ because it is ‘appraisive’ (or is considered as
valued); ‘internally complex’; and their rules of application are relatively ‘open’(Moon, Crane, &
Matten, 2004). Secondly, CSR overlaps with some, and is synonymous with other, conceptions
of business- society relations (Crane & Matten, 2004). Thirdly, defining CSR is problematic
because of the very issue which this paper draws attention to: the place of the national business
context in explaining different national CSR systems.

At the core of the concept is the idea that it reflects both the social imperatives and the social
consequences of business success, and that responsibility accordingly falls upon the corporation,
but the precise manifestation and direction of the responsibility lies at the discretion of the
corporation. CSR was thus differentiated from business activities to fulfill their core profit-
making responsibility and from the social responsibilities of government (Friedman, 1970). This
conception is grounded on broader assumptions about business, society and government which
have been widely regarded as distinguishing the USA from Europe. These include: the relative
capacity of Americans for participation (De Tocqueville, 1835/1956) their relative capacity for
philanthropy (Bremner, 1988) and, in particular, the relative capacity of business people for
philanthropy (Dowie, 2001); their relative skepticism about big government (King, 1973); and
their relative confidence about the moral worth of capitalism (Vogel, 1992).4

Furthermore, even within the USA, understandings of CSR have varied and developed over half a

5

---

century. Even Friedman (1970) identified business responsibilities to obey laws and customary
ethics as well as to pursue a prudential responsibility to invest in areas of corporate activity.
Carroll (1979; 1991) systematised these responsibilities distinguishing economic, legal, ethical
and philanthropic responsibilities. Subsequently, concerns with corporate social performance,
stakeholder relations, corporate citizenship, links with financial performance and developments
in the field of ethics have extended CSR theories and practices (Schwartz & Carroll, 2003) some
of which reflect impacts of more European thinking (Garriga et al., 2004).

THREE EXAMPLES OF CONTRASTING AMERICAN AND EUROPEAN CSR
The conceptual model developed in this paper is based on the empirical differences between the
USA and Europe in defining, addressing and implementing the responsibilities of business
towards society. To clarify this empirical basis of our argument we will refer to three examples.
We are however aware, that these examples are far from exhaustive and while the space of this
paper is limited to expand on those empirical differences we would relate to the considerable
body of literature on comparative CSR which has grown over the last decade (for an overview
see Crane et al., 2004 and references).

Worker’s rights: CSR and European employment legislation
The role and rights of employees has been one of the more longstanding and core topics of CSR
in its original context in the USA. Fair wages, working time and conditions, healthcare,
redundancy, protection against unfair dismissal, just to name a few examples, have been key
issues to which CSR policies have been addressed. Currently, many outlets of Starbucks Coffee
in the USA announce that the company is offering to pay the healthcare benefits of all employees
(respectively franchisees) who are employed by the company for more than 20 days per months5.

6

---

For Starbucks and a host of other USA corporations6, this initiative, alongside a number of other
initiatives to ‘insure the uninsured’ is one of the cornerstones of their CSR.

Following up our questions about CSR in Europe we might ask why similar initiatives could
hardly be reported from German, British or French restaurant chains. Is this because European
companies are less concerned about their employee’s health or oblivious of the social security of
their workforce in general? If we turn to the UK, every British citizen has health insurance by law
through the National Health Service (NHS) and every employee has the mandatory duty to pay a
very modest amount (compared to health insurance premiums in the USA) into this government
run and managed national health care system. Similarly in Germany, membership of a health
insurance plan is a mandatory requirement for every employee and furthermore, the legal
framework defines precisely which amount of the monthly insurance premium is paid for by the
employer and the employee (normally the split is 50/50). On a more general note then we may
conclude that the absence of CSR policies in European companies in many employment related
issues (and beyond) is due to the fact, that the institutional framework of the economy, in
particular formal, mandatory and codified rules or laws define the responsibility of corporations
and other societal actors for particular social issues. CSR as a voluntary corporate policy in
Europe appears dispensable because these issues are not left to the discretion of corporations
because they are part of the legal framework.

Environmental Protection: Different attitudes to societal risk allocation
As a second example we would draw on the work of David Vogel on the different regulatory
approaches in the USA and Europe to allocate the responsibility for technological and scientific
risks, in particular the risks of genetically manipulated organisms (GMOs, Löfstedt & Vogel,

7

---

2001; Vogel, 2002). Generally speaking, the USA authorities, most notable the Food and Drug
Administration (FDA) and the USA Department of Agriculture, operate a ‘laisser-faire’-
approach releasing 58 GMOs until 2002 while at the same time the EU Commission legalized
just 18 GMOs. As Vogel argues, this attitude reflects significant differences in public risk
perception on both sides of the Atlantic which are significantly lower in the USA than in Europe.
Given the comparatively liberal attitude of regulators towards the risks of GMOs it does not come
as a surprise that major American Food companies, such as McDonalds, Gerber and McCain, in
response to substantial consumer activism publicly renounced using ingredients made from
genetically altered seeds (Vogel, 2002: 6).

Such a radical example of corporate assumption of responsibility for what is growing to be an
issue of societal concern is far less likely to be undertaken by European companies. The reason,
again, is not that European companies care less about their environmental responsibility but
rather the fact that they are left with a far lower degree of discretion in issues of societal risk
allocation. Again, a main element of transatlantic difference lies in the institutional framework,
both on the level of informal institutions such as values and beliefs in society as well as on the
level of codified rules and norms which are part of the mandatory legal framework of corporate
activities.

Education: American and European business roles
Education is another area where we see markedly different forms of social responsibility on
either side of the Atlantic. Notwithstanding the fact that the USA has a relatively high proportion
of secondary schools in the public sector and a very large public higher education sector
underpinned by significant public expenditure (Castles, 1998), it is also an area of relative

8

---

explicit CSR priority compared to Europe. Maignan and Ralston’s (2002) comparison of
stakeholder issues found education to be the second most signalled USA stakeholder issue
whereas it is of virtually no significance for French and Dutch companies. Although education is
also ranked second for UK companies, it is not signalled by so many companies as in the USA
and the most prominent issue, protection of the environment, is signalled by almost twice as
many companies as is education.7 Support for secondary schools in the USA is not simply a case
of supporting local schools. CSR education alliances have been used by business as a major
vehicle for addressing issues of economic and social inequality (Heaveside, 1989; Lacey &
Kingsley, 1988; Timpane & Miller McNeil, 1991). Turning to higher education, Dowie (2001;
268) reported that in 1998 corporations donated $3.25bill whereas foundations (e.g. Carnegie,
Ford, Annenberg) donated $3.8bill.

This reflects features of American exceptionalism: education as general philanthropic priority
(Dowie, 2001: 23) and a highly decentralised public administration of education (Heidenheimer,
Heclo, & Adams, 1990). In contrast, despite its federal political structure, German education has
long been centrally administered and funded, extending at times to the setting of university
assignments. In Sweden, government has rationed entry to higher education according to
national labour market planning objectives. The comparative outcome has been more
conspicuous social inequality in American educational outcomes on the one hand, and higher
levels of participation, diversity, choice and innovation than in Europe on the other
(Heidenheimer et al., 1990).

Looking at these examples, we would concede that there are signs that some European companies
are beginning to include social risk issues into their branding and reputation policies. More is

9

---

being asked of corporations as well as individuals in the funding of many European employment
insurance systems. The profile of business in European education is also increasing.
Nevertheless, despite these more recent signs of convergence, the different salience of CSR
issues in different geographical areas warrant different levels of public attention in the USA and
Europe (Downs, 1972; Kingdon, 1995).

EXPLICIT AND IMPLICIT CSR – A DEFINITION
These three examples illustrate our contention that differences in the way CSR is implemented
and embedded in business-society relations in the USA and Europe depend on two key variables.
First, there is a fundamentally different institutional environment which allocates responsibility
for social issues in a different way on both sides of the Atlantic: while CSR in the USA would
address issues of the social responsibility of business explicitly in corporate policies, programmes
and strategies, the responsibility for these issues in Europe is implicit in the formal or informal
institutional environment of business. Thus the absence of CSR in Europe during the decades
when it became an explicit element of mainstream business activities in the USA does not mean
that business did not recognise and assume these responsibilities but different institutional
environments account for differences in the way CSR is implemented in Europe. Secondly, we
acknowledge that particular issues of social responsibility of business, such as the use of GMOs,
the relevance of health care insurance, or the resourcing of education differ considerably on both
sides of the Atlantic.

Our conceptualization of CSR in a European context then builds on these two variables, national
context and corporate salience of social issues and is depicted in Figure 1. To recognise the
distinctive mainsprings and modes of social responsibility yielded by our American – European

10

---

Document Outline

• ÿ
• ÿ
• ÿ
• • ÿ
    • • ÿ

---