Profit-Seeking Corporate Social Responsibility in Developing Countries: The Risk of Conflating CSR and R&D

Abstract

Strategic corporate social responsibility (CSR) has drawn praise for representing the "sweet spot" between communities’ needs and firms’ resources, capabilities and efforts. But what if the concept is pushed to its limits? A firm can initiate CSR projects not just to help communities, but to directly realize profit from them. In this conceptual paper, we ask how CSR is understood and functions when the intent of CSR projects is to conduct a form of research and development (R&D). The intended innovations are not science-based, but socially oriented; they seek to determine how to profitably meet the needs of poor people in developing countries. We develop our argument from conversations with managers and teaching cases that explain how executives believe CSR helps firms (learn how) to profitably serve new potential customers – whether through developing new markets or new products and services with a social purpose. Using CSR as a form of "living R&D" allows firms to make mistakes and to avoid short-term shareholder pressures. But there are very real risks to what in essence is unregulated experimentation on poor people, and we highlight some of them. Our argument highlights the ways in which such innovation and profit-oriented CSR challenge thinking on both CSR and R&D, and we make practical recommendations for how to ensure that intended beneficiaries are not harmed, but can instead benefit.

Keywords:

• innovation,
• profit,
• corporate social responsibility,
• CSR,
• social innovation,
• living lab,
• research and development,
• R&D,
• community