What Is the Impact of Responsible Business Organizations on Responsible Business Practice? the Case of Business for Social Responsibility

To what extent does Corporate Social Responsibility (CSR) actually
improve companies’ social and environmental performance? Scarcely any
question is more vigorously debated and contested in the responsible
business literature. On one side, CSR’s advocates maintain that
responsible businesses harness capitalism’s dynamism to develop
innovative solutions to wicked problems.  On the other side, CSR’s
detractors charge that it is mostly public relations hype and
greenwashing that serves to cover up the grim realities of corporate
malfeasance. Since each side can draw on arguments and cite examples
to support its position, it is hard to resolve this dispute. Part of
the underlying problem is that we don’t know much about the actual
impacts of CSR, let alone the influence of responsible business
organizations on firms’ environmental, social, and governance (ESG)
performance. This paper helps fill this gap with an analysis of one of
the world’s leading CSR organizations and sustainability
consultancies, Business for Social Responsibility.

Founded at the beginning of the 1990s, BSR describes its mission as
“to work with business to create a just and sustainable world.” We
argue that our analysis of BSR has potentially far-reaching
implications. If BSR has been able to significantly improve the of its
member companies longstanding member companies (as compared with
non-members). If BSR has been unable to significantly improve the
Economic, Social, and Governance (ESG) performance of member
companies, this would bolster the claims of CSR skeptics as it is
unlikely that other, less well-resourced CSR organizations are in a
better position to achieve this goal. Conversely, if BSR member
companies significantly out-perform non-members, this could lend
credibility to organizations such as BSR and to voluntary and
market-driven sustainability solutions more generally.

At the same time, we go beyond existing work that has analyzed program
design and effectiveness by exploring the effect of membership on a number
of outcome dimensions, such as depth of CSR adoption, occurrences of irresponsibility,
transparency of CSR initiatives, and stability of CSR profiles.
Drawing on detailed adoption data for a large number of firms over time,
we find that BSR member companies have a better social performance
than comparable non-member firms. To strengthen the plausibility of our findings,
we use coarsened exact matching and difference-in-difference estimation for a sample of
BSR member and non-member companies. We find that BSR
members seem to out-perform non-members in the ‘tougher’ CSR areas –
when it comes to human rights, health and safety, and training.
Members are also much more transparent than non-members. But BSR
members also have higher levels of corporate irresponsibility /
controversial / bad behavior in some areas. Drawing on organizational and
political economy theories, we suggest possible explanations for these outcomes
and explore some of the ways in which BSR has promoted learning over time.
We also seek to explain why some BSR member companies are on a serious sustainability mission, with
full support by senior management, while others are member companies
in name only, without a lot of buy in or internal support.