Evolution and Implementation:
A Study of Values, Business
Ethics and Corporate
Social Responsibility
ABSTRACT. There is growing recognition that good
ethics can have a positive economic impact on the
performance of firms. Many statistics support the
premise that ethics, values, integrity and responsibility
are required in the modern workplace. For consumer
groups and society at large, research has shown that
good ethics is good business. This study defines and
traces the emergence and evolution within the
business literature of the concepts of values, business
ethics and corporate social responsibility to illustrate
the increased emphasis that has been placed on these
issues over time. Two organizations that have suc-
cessfully dealt with these issues were analyzed to
identify the links among values, ethics, and corpo-
rate social responsibility as they are incorporated into
the culture and management of a firm. This study
identified the presence and implementation of values,
Brenda E. Joyner is Associate Professor of Management at
Loyola University New Orleans. She received her Ph.D.
from the University of Georgia in 1995. Dr. Joyner
teaches classes in strategic management, entrepreneurship,
and strategic quality management. Her research inter-
ests include venture startups, entrepreneurial behaviors,
and entrepreneurial ethics. Her business experience
includes eight years with a startup venture in the con-
struction industry, two years with a Fortune 500 man-
ufacturing firm, and many years in the financial services
industry in investment and commercial banking. She has
published articles in Journal of Developmental
Entrepreneurship, Journal of Business and
Economic Perspectives, Frontiers of
Entrepreneurship Research, Global Focus and
Quality Progress. She is a 1997 recipient of the
Certificate of Distinction for Excellence in
Research in Entrepreneurship and Independent
Business, given by the Academy of Management and
the National Federation for Independent Businesses.
Journal of Business Ethics 41: 297–311, 2002.
© 2002 Kluwer Academic Publishers. Printed in the Netherlands.
Brenda E. Joyner
Dinah Payne
business ethics, and CSR actions within the two orga-
nizations studied.
Introduction
It has been clearly established that ethics is not
just a fad.
“. . . (W)inning companies first emphasize values
– the beliefs and attitudes that . . . the business
owner, ha(s) about . . . employees, customers,
quality, ethics, integrity, social responsibility,
growth, stability, innovation and flexibility.
Managing by values – not by profits – is a powerful
process that will set . . . (a) business on the path
to becoming . . . a “Fortunate 500” company
(Blanchard, 1998).”
Dinah Payne is Professor of Management at the University
of New Orleans. A graduate of Loyola University New
Orleans, Dr. Payne earned a Juris Doctor Degree and
a Master of Business Administration Degree. Her
teaching and research interests include multiple facets of
international business: law, strategy, organizational
behavior, corporate social responsibility and ethics.
Additionally, she has done extensive research in U.S.
domestic business law, ethics, management and engi-
neering management. She has had articles published in
the Journal of Business Ethics, the Labor Law
Journal, the Journal of Managerial Issues,
Management Accounting, and the Journal of
Corporate Accounting and Finance. She is a
member of the American Bar Association, the Louisiana
Bar Association, the New Orleans World Trade Center,
the Academy of Legal Studies in Business and the
International Academy of Business Disciplines.
298 Brenda E. Joyner and Dinah Payne
Many statistics support the premise that “talk
about ethics, values, integrity and responsibility
is not only becoming acceptable in the business
community, it’s practically required (Stodder,
1998).” For consumer groups and society at large,
research has shown that good ethics is good
business. Stodder (1998) reports that a Walker
Information survey (1994) of consumers
produced results indicating that good business is
good ethics: forty-seven per cent of those polled
responded that they would be much more likely
to buy from a “good” company given parity in
quality, service and price. Additionally, 70% of
the consumers answered that they would not do
business with a firm that was not socially respon-
sible, regardless of price.
In light of the change in the way values and
ethics are viewed by organizational stakeholders,
there has been growing recognition that prof-
itability measures, in isolation, fail to capture the
essence of an organization’s overall performance,
both as a profit-seeking entity and as a member
of society. This paper suggests, as a starting point,
general suppositions as to why businesses are
ethical and proceeds with a review of the seman-
tics of business ethics and a foundational presen-
tation of the definitions of values, business
ethics/morality and corporate social responsibility
(CSR). Further, it traces the emergence and
evolution within the business literature of the
concepts of values, business ethics and CSR to
illustrate the increased emphasis which has been
placed on these issues over time. Two organiza-
tions that have successfully dealt with these issues
are profiled in order to try to discover the link
between values, ethics, and CSR as they are
incorporated into the culture and management
of a firm. These organizations are also models
to show the positive economic impact that good
ethics can create. Thus, we perceive the eco-
nomic and moral value of good business ethics.
Business ethics: the why
A predicate question to the role of ethics in
business is the question of why businesses engage
in ethical practices. Some authors, notably
Milton Friedman (1962), would strongly deny
that a business has a fiduciary responsibility to
any group but the firm’s stockholders. To initiate
corporate giving, for example, would be a
fiduciary breach of management in Friedman’s
opinion: an agent for a principal is neither legally
nor morally permitted to give away or “waste”
the principal’s capital. The manager’s fiduciary
duty, one wherein stockholders should be able to
repose trust and confidence in management’s
obligation to act in the shareholders’ own best
self-interest, is to husband organizational strength
and generate a growth environment, for the
continued maximization of shareholder wealth.
Employees are also an integral part of the firm’s
environmental ethics. A Walker Information
survey (1997) revealed that 86% of the employees
surveyed who felt their firm’s ethics were
positive, were strongly committed to their orga-
nizations, while only 14% of the respondents
who did not regard the firm’s ethics highly, were
similarly committed. 42% of all surveyed indi-
cated that a firm’s ethical integrity would directly
influence their choice of employer (Stodder,
1998).
The view of pursuing shareholder wealth
alone, of course, is not the approach most
ethicists or, now, most business people take. The
realization has occurred that businesses must
participate in society in an ethically symbiotic
way. A fundamental truth is that business cannot
exist without society and that society cannot go
forward without business. Thus, business must
acknowledge society’s existence and society’s
growing demand for more ethically responsible
business practice.
Businesses will in fact engage in ethical
business practices for one of two reasons, one
ethical in nature and one more machiavellian.
The ethical motivation guiding business is related
to a desire to do the right thing, without external
pressure or governmental constraint. As this
empirical evidence presented here shows,
business does choose this approach without being
forced into doing so. These business people
recognize their own personal existence in society
and thus acknowledge that their firms must also
operate in this sphere in an ethical manner.
The more machiavellian approach that busi-
nesses espouse in their use of ethics has its roots
 Evolution and Implementation
in a desire to convince the stakeholder that the
firm is doing the right thing. The firm’s end here
is either to avoid legal consequences of its actions
or to convince the stakeholders that the firm does
have their best interests at heart and seeks to serve
their interests rather than their own. An example
of this is the beer industry: the advertising cam-
paigns touting responsible consumption of beer
may in fact be to serve the consumer interest in
safety. However, in a more cynical world, such
an advertising campaign could have been
designed to make the consumer feel that the
firms cared more for their consumers than for
selling their products.
In fact, minimal compliance with legal
standards alone can be deadly to the firm. The
myriad of laws affecting corporate existence and
behavior is numerous enough to entangle any
business to its demise (see the example of Johns-
Manville, the now defunct manufacturer of
asbestos). Public outrage over perceived illegal or
immoral acts is as harsh, if not worse: trust is
lost and public image tarnished, good will that
is extremely expensive to generate initially and
almost impossible to regain once lost. Thus,
“(A)lthough legality generally stems from what
society believes is morally right or wrong, an
issue’s legality does not always reflect the totality
of its perceived morality. This differentiation
reflects the classic distinction between the spirit
of the law (morality) and the letter of the law
(legality) (Raiborn and Payne, 1990).”
Right or wrong: the definitions of ethics
There has been considerable debate regarding
what the terms values, business ethics and CSR
represent. In order to be consistent with prior
literature in social issues and management
research and to assist the reader, the following
definitions were used throughout this research.
Values are defined as the core set of beliefs and
principles deemed to be desirable (by groups) of
individuals (Andrews, 1987; Mason, 1992).
Values are derived from one’s membership in a
culture. With attitudes, beliefs, and behaviors,
values combine to form a continuous spiral of
community culture (Adler, 1999). Each suc-
299
ceeding generation has impact on the next
generation’s values, beliefs, attitudes and behav-
iors. Thus, our grandparents’ values are likely to
be reflected in ours, as ours are to be reflected
in our children’s and grandchildren’s. As the
movement towards consciously incorporating
ethics into businesses in our society grows, the
stronger will be the cultural pull to be ethical.
Ethics are defined as the conception of what
is right and fair conduct or behavior (Carroll,
1991; Freeman and Gilbert, 1988). “Ethics is a
system of value principles or practices and a
definition of right and wrong (Raiborn and
Payne, 1990).” Velasquez (1999) defined ethics as
being concerned with judgements involved in
moral decisions: normative judgements which
state or imply that something is good or bad, or
right or wrong. Thus, these statements of ethics
or value judgements attempt to ascribe value to
actions, so the actor can determine whether or
not he should engage in the action.
More specifically with regard to business, De
George (1999) defined business ethics as the
interaction of ethics and business. Such a defin-
ition encompasses a moral evaluation of the
economic system of the free enterprise system
in the United States, the businesses which
operate in this system, a moral evaluation of
individuals and their actions in conducting
business and a review of business behavior in the
international arena. De George provides further
illumination: moral judgements should be uni-
versally applicable, they involve serious matters
with potential to cause serious results, and moral
judgements invoke praise or blame. Additionally,
moral judgements can only be made by individ-
uals for themselves: others, including govern-
mental agencies, cannot force moral judgements
on anyone. De George also distinguished
between objective and subjective morality.
Objective morality is the broader, societally held
moral law. This is most easily equated with
promulgated law. Subjective morality, on the
other hand, is one’s own belief as to the right-
ness or wrongness of an action. This is equat-
able to the concept of conscience. In a perfect
world, the decision-maker would make decisions
that were deemed both objectively and subjec-
tively correct. In the world of business and entre-
300 Brenda E. Joyner and Dinah Payne
preneurship, the decision-maker must sometimes
choose between those moralities: strong minded
entrepreneurs choose the subjective right.
A common sense, dictionary-type definition
of the word moral or even morality indicates that
morality is the ability to choose between right
and wrong. Reasonably, the definitions of ethics
and morality are cross-referenced to each other.
The terms moral and ethical have been used
interchangeably in this paper, as they are in much
of the social issues literature (Freeman and
Gilbert, 1988). Additionally, the concept of cor-
porate social responsibility, defined more specif-
ically below, is often included in the definition
of ethics in general (Singer, 1993).
Corporate social responsibility (CSR) is
defined as categories or levels of economic, legal,
ethical and discretionary activities of a business
entity as adapted to the values and expectations
of society (Andrews, 1987; Carroll, 1979; Sethi,
1975). The term corporate social responsibility
is used more in the management literature than
in the business ethics literature. However, while
some authors may not agree (Friedman, 1962),
the researchers feel that these concepts, as with
the terms moral and ethical, are similar enough
to be interchangeable for the purposes of this
paper.
Archie Carroll (1979) has developed a frame-
work for integrating all dimensions of social
responsibility into the firm’s corporate culture
and decision making processes. The “Organiza-
tional Social Performance Model” is comprised
of three dimensions and can be visualized as a
three dimensional cube, with all sets of dimen-
sions intersecting with the others: the level of
responsibility can be measured against the social
issue involved, as well as the firm’s social respon-
siveness to these issues. Dimension I contains the
“Social Responsibility” categories. These respon-
sibilities, in order of importance to the firm, are
economic, legal, ethical and discretionary. The
economic responsibilities of the firm are to
produce goods and services to be sold at a profit.
Obedience to societal laws and regulations, while
executing economic responsibilities is the firm’s
legal responsibilities. The firm’s ethical responsi-
bilities are to meet society’s expectations for
conscientious and proper behavior. Carroll rec-
ognized in developing this responsibility that
these expectations may not be only a matter of
legal compliance, according to the letter of the
law, but may go further in pursuit of the spirit
of the law. Finally, the firm’s discretionary
responsibilities encompass the duty to carry out
acts of a voluntary nature designed to provide for
the betterment of society, such as philanthropic
contributions or provisions of certain employee
benefits. Such acts are not required to be under-
taken by the firm, as legal responsibilities are, and
the firm would not be considered unethical for
not engaging in these activities, but it is within
the firm’s discretion to do the acts as a con-
tributing member of society.
The second dimension of Carroll’s model is
represented by the firm’s the “Philosophy of
Social Responsiveness.” These philosophies direct
how an organization will respond to social issues.
There are four types of social responsiveness
philosophies. First, the reaction philosophies
require the firm to address social issues as a result
of the application of external forces, such as legal,
regulatory or social pressures. Defense philoso-
phies address social issues to escape being forced
into it by the external forces. The third philos-
ophy of responsiveness is the accommodation
philosophy: these firms address social issues
because they exist. This represents a stride in the
direction of doing the right thing because it is
the right thing, rather than from some ulterior
motive to further the economic interests of the
firm. In this instance, the demands to recognize
and deal with social issues are not likely to be
made by external forces, but the firm takes a
voluntary stance in dealing with social issues
before being forced into it by outside forces. The
final philosophy goes even further than the
accommodation philosophy. The proaction
philosophy is one that attempts to be proactive
with society: it attempts to anticipate important
social issues before they are generally recognized
as being important and to develop strategies for
addressing these issues.
The third dimension of this model is the
dimensions of the social issues themselves. A
review of stakeholders and issues in our society
yields a list of issues identified by Carroll: con-
sumerism, environmentalism, discrimination
 Evolution and Implementation
issues, issues involving product safety and occu-
pational safety, and shareholder issues. It can be
anticipated that these issues and stakeholders are
not static; social issues are as dynamic as is society
and the list should be considered illustrative only,
not complete. In light of the Carroll model, it is
clear that one must consider the existence and
importance of the firm’s stakeholders in the
ethical decision making process. These stake-
holders include, but are not necessarily limited
to: employees, stockholders, customers, suppliers,
lenders, communities and society at large
(Vaughn, 1997). This paper attempts to track the
use of these dimensions by entrepreneurs and to
determine the extent to which the entrepreneurs
and their business have incorporated these ideas
into their corporate cultures.
These concepts of values, ethics/morality and
CSR are not mutually exclusive; rather, they are
interrelated and somewhat interdependent.
Values influence the extent of a corporation’s
perceived social responsibility and are influenced
by societal activities and norms or standards. One
component of corporate social responsibility is
an organization’s ethical responsibility, which is
also influenced by the values of society (Carroll,
1979). Conversely, ethical or unethical activities
of an organization can influence the values held
by members of society. Once again, the spiral of
culture, wherein culture influences values, which
influence beliefs, which influence attitudes,
which influence behaviors, which shapes culture,
continues to form.
Literature review
Some of the classic texts that form the founda-
tions of management research and practice were
researched to identify these themes as they
emerged and evolved in the literature to identify
changes in perception of these concepts over
time. In addition, other texts published more
recently were reviewed to identify the most
recent changes in the understanding of these
concepts.
301
The evolving concepts
While the management literature has many good
books and articles which address values, business
ethics, and CSR, the following works have been
chosen because they have endured through the
years and generated much of the original dis-
course in the concepts of interest (Schendel and
Hofer, 1979; Summer et al., 1990). They are
summarized in Table I.
The role of the organization within the larger
society was addressed by Chester Barnard as early
as 1938 in his seminal book, The Functions of the
Executive. Barnard decried the lack of recogni-
tion that formal organizations are a most impor-
tant characteristic of social life, as they are the
principal structural frameworks of society itself
(1938, p. xxix). He concentrated on aspects of
individual action, which are directed by their
connection with formal organizations. Barnard
recognized that many unwritten rules guiding an
organization’s course of business grew from actual
practice (1938, p. 172). He addressed the need
to analyze the economic, legal, moral, social, and
physical elements of the environment when
making business decisions (1938, p. 198), stating
that the organization endures depending upon
the quality of its leadership, which is in propor-
tion to the breadth of morality on which it stands
(1938, p. 282).
Herbert Simon’s book, Administrative Behavior
(1945), built on the work of Barnard. Like
Barnard, Simon noted the strong influence of the
organization on the individual and addressed
aspects of individual action within the context of
the organization. While Simon recognized that
organizations must be responsive to community
values, far beyond explicit legal considerations,
he saw the primary criteria of “good” business
as economic behavior accurately calculated to
recognized a gain (1945, p. 62). He noted,
however, that an increasing number of businesses
had become affected with a public interest, as
executives had become concerned with respon-
sibilities of trusteeship toward the community
beyond the legal limits imposed on them (1945,
p. 70).
Peter Drucker, in his book The Practice of
Management, was among the first authors to
302 Brenda E. Joyner and Dinah Payne

TABLE I
Corporate social responsibility, business ethics, and values: An historical perspective

Authors Corporate social responsibility Ethical/Moral considerations Values/Other

Barnard Analyze economic, legal,
(1938) moral, social and physical
aspects of environment
Simon Organizations must be
(1945) responsible to community
values
Drucker Management must consider
(1954) impact of every business
policy upon society
Selznick Enduring enterprise will
(1957) contribute to maintenance
of community stability
Andrews Firm should have explicit
(1971- strategy for support of
Revision) community institutions
Freeman Business must satisfy
(1984) multiple stakeholders
Morals are active result of
accumulated influences on
persons evident in actions
Ethical propositions assert
“oughts”, rather than facts
Morality must be principle
of action exhibited through
tangible behavior
Definition of mission
includes wider moral
objectives
Defining firm only in financial
terms leads to subordination
of ethical concerns
Concern for ethics necessary
but not sufficient to decide
“what we stand for”
Responsibility: power of
private code of morals to
control individual conduct
Firm survival involves
adapting objectives to values
of customers
First responsibility to society
is to make a profit
Leadership requires defense
of critical values
Ethical behavior is product
of values
Enterprise strategy: what do
we stand for?

explicitly address the “social responsibilities of
business” (1954, p. ix). Whereas Barnard (1938)
and Simon (1945) gave far more attention to the
moral/ethical dimensions of individual behavior
in organizations, Drucker concentrated more on
CSR. He included public responsibility as one of
the eight key areas in which business objectives
should be set. Further, Drucker stated that
objectives in this area must be set according to
prevailing political and social conditions as per-
ceived by management (1954, p. 82). Morality
had to be a principle of action, exhibited through
tangible behavior, that stressed building on
strengths, integrity, and high standards of justice
and conduct (1954, p. 146). Drucker recognized
the growing requirement that a manager assume
responsibility for the public good, as he subor-
dinated his actions to an ethical standard of
conduct. While he emphatically declared that the
organization’s first responsibility to society
involved making a profit, he felt it was also most
important that management consider the impact
of every business policy and action upon society.
“It has to consider whether the action is likely
to promote the public good, to advance the basic
beliefs of our society, to contribute to its stability,
strength, and harmony” (1954, p. 388). The
ultimate responsibility of management was “to
itself, to the enterprise, to our heritage, to our
society, and to our way of life” (1954, p. 392).
Philip Selznick primarily addressed values,
although he did provide some insight into
moral/ethical considerations and corporate social
responsibility, in his book Leadership in
Administration: A Sociological Perspective. He noted
that sound organizational leadership required the
“proper ordering of human affairs, including the
establishment of social order, the determination
of public interest, and the defense of critical
values” (1957, p. ix). Like Drucker (1954),
Selznick realized that organizations had become
increasingly public in nature and needed to deal
with problems that affected the welfare of the
entire community. He stated that goal statements
based on making a profit offered little guidance
in the formulation of organizational purpose. A
 Evolution and Implementation
large corporation which shifted from “a narrow
emphasis on profit making to a larger social
responsibility” was required to build special
values into the organization (1957, pp. 26–27).
For Selznick, the formation of an institution was
marked by the making of value commitments
that accounted for its role in the community.
Kenneth R. Andrews, in his 1987 revision of
The Concepts of Corporate Strategy, originally
published in 1971, viewed ethical behavior as a
product of values and, like the previous authors,
recognized the ever growing importance of
values, ethical/moral considerations and CSR.
He stated that defining the corporation as a
means to serving only the financial interests of
its shareholders led to a subordination of ethical
concern to financial outcome. Andrews suggested
that a company should venture into good works
that were strategically related to its present and
prospective economic functions. He also
proposed that a firm should have both economic
and non-economic objectives, which coincided
with similar views held by Drucker (1954) and
Ansoff (1965). Andrews stated that the strategi-
cally directed company “will have a strategy for
support of its community institutions as explicit
as its economic strategy and as its decisions about
the kind of organization it intends to be and the
kind of people it intends to attract to its mem-
bership” (1987, p. 77).
In his book, Strategic Management: A Stakeholder
Approach, R. Edward Freeman built on a promi-
nent theme found in the previous books
examined here: business organizations operate in
increasingly complex environments and must
satisfy multiple constituencies, or “stakeholders”
(1984, p. 26). Freeman noted that the traditional
corporate strategy attention to stockholder
concerns could involve actions which are
immoral or unethical, as well as illegal. He
recognized the growing importance of ethics, as
evidenced by the development of codes of ethics
in businesses and the increasing number of ethics
courses in business schools. He proposed the
concept of stakeholder management as an inte-
grating force to address CSR, ethical/moral
considerations, and values.
In the decade since the last of these founda-
tional books was published, books and articles
303
about values, ethics, morality, and corporate
social responsibility have flourished. Today the
demands for social responsibility and ethical
behavior by corporations and their leaders
are stronger than ever before. Solomon (1997)
postulates several reasons for this. First, the
enormous success of American businesses has
bred extravagant expectations by the public.
Second, the new nobility, the privileged class,
that has emerged because of this enormous
success is corporate business – and society has
always made demands of its nobility (noblesse
oblige). Finally, Solomon states that “now that
businesses are often the most powerful institu-
tions in the world, the expanse of social respon-
sibility has enlarged to include areas formerly
considered the domain of governments: quality
of education and support of the arts, funding and
facilities for basic research, urban planning and
development, world hunger and poverty, hard-
core unemployment. The more powerful business
becomes in the world, the more responsibility for
the well-being of the world it will be expected
to bear” (pp. 204–206). Clearly the concept of
corporate social responsibility has grown to
include a stunning plethora of social concerns.
But what about our understanding of values
and ethics today? How do our leaders encourage
and promote ethical behavior by individuals in
an organization? Solomon (1997, p. 140) states
that “. . . corporate cultures set up the network
of people and positions with whom we feel
comfortable and, given the enormous power of
peer pressure in ethics, one should not be sur-
prised that the culture of the corporation – rather
than ‘individual values’ – is the primary deter-
minant of business ethics. Different businesses
provide different cultures, and different cultures
define different values, different ethics, different
lives”. In small firms the cultures, and therefore
the values and ethics of the organization, are
strongly shaped by the founders ( Joyner and
Hofer, 1992). As firms grow, there is the danger
that impersonality may set in and ethics may
generate into a set of abstract rules that can too
easily be compromised (or reinterpreted) under
the pressure of corporate hierarchy (Solomon,
1997, p. 144). However, size is not always the
determining factor. Some individuals may
304 Brenda E. Joyner and Dinah Payne

identify strongly with smaller groups within a
larger organization and ethical responses are
reinforced. Even in small organizations, some
individuals may feel isolated and resort to uneth-
ical behavior.
The emergence of the concepts discussed here
and their evolution over time in the literature of
management shows an increasing emphasis by the
academic community on the social issues that a
firm must consider. However, at the same time
these issues were being considered by the
academic community, they were also being
addressed by the business community. It is the
way in which practitioners have addressed these
issues that is the focus of this study.
Methodology
This study seeks to identify the link between
values, business ethics, and corporate social
responsibility. The first phase of the study was
the empirical identification and description of
these issues within business practice.
Because CSR is a concept made up of various
categories, it was necessary to find a framework
for identifying those levels within the practice
of CSR. A widely used set of categories of CSR
appears to be that set identified by Carroll (1979)
in his “Organizational Social Performance
Model.” It should be noted that the concept of
business ethics falls within the category of ethical
responsiveness in the Carroll model. See Table
II.
Two organizations that have been publicly
acknowledged as socially responsible firms by
organizations and communities where they
operate were selected as subjects for this study.
The first firm (Firm A) is a large commercial
construction company with annual sales of
approximately $150 million. The company has
been in business for more than three decades and
is highly regarded, both in the local business
community where its headquarters are located,
and also within the national community of
builders. The second subject (Firm B) is also a
commercial construction firm with annual sales
of approximately $40 million. This company has
been in business for fifteen years and specializes
in renovation of large commercial complexes. It
is also well regarded by its peers within the local
and national business communities. Both orga-
nizations are still run by their founding entre-
preneurs. The founders were willing to discuss
their experiences during the start up and devel-
opment of these ventures, and agreed to partic-
ipate fully in whatever manner seemed
appropriate for the research.
Data collection
Interviews are an appropriate technique for gath-
ering data concerning cultural categories and

TABLE II
Organizational social performance model

Dimension I – Philosophy Dimension II – Social Dimension III – Social Issues

of Social Responsiveness Responsibility Categories Involved

Proaction Discretionary responsibilities Consumerism

Accommodation Ethical responsibilities Environment
Defense Legal responsibilities Discrimination
Reaction Economic responsibilities Product safety
Occupational safety
Shareholders

Adapted from A. B. Carroll (1979), ‘A Three-Dimensional Conceptual Model of Corporate Performance’,

Academy of Management Review 4, 503.
 Evolution and Implementation 305

shared meanings (McCracken, 1988). Semi-struc- Data analysis

tured interview questions were prepared in
advance to probe those areas of interest to the
researcher. (See Exhibit 1.) These open-ended
questions allowed elaboration by the subject, but
focused the discussion to allow the most efficient
use of time by the interviewer. Both interviews
were recorded on tape and then transcribed for
analysis. The two entrepreneurs then reviewed
the transcripts and made any corrections neces-
sary. The corrected transcripts were used for the
data analysis.
Content analysis was used to search for the three
concepts of values, business ethics and CSR
within the transcripts. All data related to corpo-
rate social responsibility were then further
analyzed to identify whether or not they could
be assigned to any of the four categories of social
responsibility as outlined by Carroll (1979). Data
which fell within the business ethics concept
were placed within the ethical responsiveness
category of the Carroll model. Once the data
were assigned to categories, the categories were
analyzed for possible links to the financial per-

EXHIBIT 1
Interview guide

01. Give me a little background about yourself. How did you end up in this business?
02. How did you identify the business opportunity and evaluate the potential of the business before you started
up?
03. Did you have a fully developed concept of the business when you began? If not, how did it develop? How
has it changed over time?
04. What resources did you need to get started? How did you acquire them?
05. How did you market your company in the beginning? Has that changed over time? How important is
marketing in your business?
06. Do you compete mainly on price, quality, differentiated service or product – or in some other way? Who
do you see as your competition?
07. How do you produce your product or service? Has that changed over time?
08. Has technology played a significant role in the development of your business?
09. As new ventures grow, their cultures develop. How would you describe the culture of this company? How
have you influenced the development of culture within your company?
10. With growth comes the formalization of structure. What kind of structure does this company have and
why did you choose that particular form?
11. With growth, systems and processes must be put in place. What systems and processes did your company
develop? Which were most important? How did your employees react to them?
12. How have you managed the transition from startup entrepreneur to manager of such a large business?
13. Do you foresee selling the company, retiring, or turning it over to other management in the near future?
14. What do you see as the future of the business?
15. What was the state of the industry when you entered it? How has that changed over time?
16. How have you developed the people in your company over time?
17. Were there any people who were especially important in helping you develop the ideas or experience
necessary to begin the company?
18. How does the decision-making process in your business work?
19. Do you do research and development for either products or processes for the business? If so, how do you
do that?
20. Have you ever reached a point where you had to redefine your business concept? When did that occur
and how did you do that?
21. Are there other tasks associated with startup and development of your business that you found essential to
the success of the venture that we haven’t discussed?
306 Brenda E. Joyner and Dinah Payne
formance of the firms. It should be noted that
the design of this study prohibits the ascertain-
ment of causality with respect to financial per-
formance and these issues; while some linkages
have been identified, the authors cannot state that
the values, ethics and CSR linkages cause
changes in financial performance. The findings
are detailed below.
Findings of the study
Economic responsibilities
According to the Carroll model, the economic
responsibilities of the firm are to produce goods
and/or provide services and sell them at a profit.
The need to make a profit is sometimes thought
of as incompatible with the assumption of
responsibility to the larger community. “‘The
marketplace puts one’s convictions to the test. A
business is not a philanthropy, social aid service
or school. And if it tries to be all things to all
people, it won’t be able to fulfill its mission
(Vaughn, 1997, p. 14).’” However, the two firms
in this study had different thoughts on the
subject: they did not perceive that the produc-
tion of goods and/or provision of services at a
profit was mutually exclusive with good business
ethics.
Firm A: In the Atlanta business community you
are expected to be a part of the public service
scene, process. It’s a negative if you don’t do it.
And when you do it you find yourself doing it with
all kinds of other business leaders. So it’s an
opportunity, it’s a tailor made opportunity to
network with other decision-makers and a lot of
the business we get is relationship driven.
The founder of this firm clearly perceived that
his economic responsibility was to make a profit;
he was also farsighted enough to realize that his
firm’s economic welfare, a duty asserted to exist
by the Carroll model, was dependent on his
involvement in the public service sector. Because
of this, he used networking as a means to increase
his exposure with the public service sector. His
statement above unites the fulfillment of the
firm’s economic responsibilities with its ethical
and discretionary responsibilities to meet or
exceed societal standards of what is expected or
considered morally right. This statement also
reflects three of the response philosophies
discussed earlier: the defense, accommodation
and proaction philosophies. His statement implies
that the defense philosophy is only marginally
in place; the entrepreneur would apparently
exceed his ethical and discretionary responsibil-
ities even if he did not want to avoid being forced
into it by outside forces. The statement also
implies the accommodation philosophy of
addressing social issues because they exist –
“because the public service scene” exists. Also,
that such participation is “a tailor made oppor-
tunity to network with other decision-makers”
implies a proactive approach to social issues: the
proaction philosophy. As a whole, the entrepre-
neur’s statement seems to recognize the impor-
tance of Carroll’s model’s Dimension III, social
issues/publics. Acknowledgement of the idea of
a “relationship driven” business is a tacit accep-
tance of a number of stakeholders affected by the
founder’s firm’s actions: stockholders, creditors,
other business leaders in the community, the
community itself . . .
The founder of Firm B found that doing the
socially responsible thing can also result in
positive economic gain.
Firm B: In 1980 we were two years old. The only
job I could get in (the city) was renovating low-
income housing. I couldn’t get another job. . . .
(W)e were getting robbed every night, we were
getting torched every night. I got this idea. We
could hire four security guards who would cost
$150,000 for the duration of the project. Their
lives would be in jeopardy. Instead I went to the
neighborhood association leader, a marvelous . . .
lady who was President of the neighborhood asso-
ciation. I said, “Look, I need your help. I would
like to put $10,000 in escrow with an attorney of
your choosing. If the neighborhood would simply
call the police if you see strangers around our
project at night. I don’t want anyone to jeopar-
dize his or her life, I want you to simply help us
to secure the job.” I actually found a dead body
on the job one day. There was shooting around the
site. It was a major drug dealing area.
The police got wind of it and they decided that
they had been trying to get a neighborhood watch
 Evolution and Implementation 307

program for years and they said this is our chance. of both the community and the firm. The stake-
They’re getting $10,000 bucks from this contractor holders who benefited here are numerous:
in return for doing what we’ve been trying to get shareholders (who saved thousands of dollars), the
them to do. So the police made a commitment to neighborhood association, the groups funded at
respond to any call from this neighborhood during the discretion of the neighborhood association,
the project time within three minutes. The Fire
the community itself . . .
Department heard about it. Some of the guys from
the Fire Department lived in the neighborhood.
They promised that on their way back from fires
they would go through the neighborhood. The Legal responsibilities
school principals sent home flyers outlining the
chance to earn $10,000 for the neighborhood if Obedience to society’s promulgated laws coupled
residents would just help this contractor. The with pursuit of the firm’s economic responsibil-
ministers from the churches urged their members ities is the second most important element of
every Sunday to remember to watch the (City) Carroll’s dimensions of social responsibility. It
apartments. The crime virtually stopped. The requires at least minimal adherence to the law.
heavy stuff stopped although we still had some The entrepreneurs in this study exhibited an
minor problems. understanding of the importance of laws and
The neighborhood was presented a check at the
abiding by them, as part of their strategy to be
end of the project. They gave me a full accounting
of every nickel of the $10,000 that they spent.
successful, ethical businesses.
They got uniforms for the neighborhood kids track
team and baseball teams and some equipment for Firm B: This company was the first to test for
the community center. We’re still members of the drugs. When you go on a scaffold you will know
Neighborhood Association. The press picked up that the person standing next to you, the person
on it . . . And we just got tremendous mileage out who erected the scaffold is not on drugs and we
of the $10,000 instead of $150,000 for watchmen. will have random testing every month, because I
Remember that’s what we saved: $140,000. want to assure you that your place of work will
be safe.
This is an interesting combination of the two
This statement indicates that the entrepreneur has
motivations to do the right thing. In this
accepted the societal prohibition against the use
instance, the business owner had the choice of
of controlled substances that could endanger safe
involving the community or not, of acting in
conditions at the workplace. In so accepting these
recognition of the symbiotic relationship between
laws and regulations (laws against illegal substance
business and the community or not. This entre-
abuse and OSHA regulations), the entrepreneur
preneur decided to invest in the community, with
has not only complied with his basic legal
the result that his return on his investment was
responsibilities, he has also complied with
both tangibly (”the press picked it up” – equating
Carroll’s model in obeying such laws and regu-
to free publicity, a marketing method that is not
lations to the betterment of the firm’s economic
paid for and frequently results in very positive
responsibilities: a safe workplace means fewer
gains for the business) and intangibly: the
costly accidents.
goodwill of the community and the Neighbor-
The organizational response to the example of
hood Association. This action is again commen-
the legal issue of drug testing presented here is
surate with the Carroll model dictating economic
once again that of the proaction philosophy.
responsibility as the first duty of the firm. By
Rather than wait for one of the many stake-
engaging in ethically laudable behavior, this firm
holders that could be affected to be injured, the
saved a good bit of money – the first obligation
founder of the firm anticipated the need to
of the firm.
address the social issue of drug abuse in the
The firm accepted the possibility of trouble
workplace.
associated with building in that area and, suc-
cessfully, dealt with them, to the mutual benefit
308 Brenda E. Joyner and Dinah Payne
Ethical responsibilities
The founder of Firm A spoke of his role in a
community project and the impact it has had on
the organization. In acknowledging his obliga-
tions to his society, the founder exhibits
commitment to fulfilling Carroll’s ethical respon-
sibilities “to meet society’s expectations for
conscientious and proper behavior, even when
these expectations are not reflected in the letter
of laws and regulations” (Dunham and Pierce,
1989).
Firm A: I am the chairman of (a large, highly
visible social event). I’m able to do that. Not only
am I spending a lot of my time doing that, a lot
of my money doing that. I don’t accept any kind
of money, I’m a volunteer so I don’t get paid. And
I don’t take any reimbursement. And we disqual-
ified our company from doing any of the con-
struction because of the conflict of interest. Which
means we sit here and watch the team who got
picked to do the stadium build the stadium. That’s
a $150 million job . . . So we sit and watch our
competitors . . . do that.
The firm’s ethical responsibilities are to meet
society’s expectations for conscientious and
proper behavior. Additionally, the firm should
have good faith commitment to the spirit of the
law, not just the letter of the law, as the legal
responsibilities category requires. It is important
to note that doing the right thing can be diffi-
cult, both personally and in business. The
question this founder asked and answered is
whether one should do the ethically right thing
in the face of substantial costs to the firm. This
entrepreneur clearly found that his commitment,
his ethical responsibility, to the community was
much greater than the fear of the potential for
lost profits. Vaughn (1997, p. 14) warns of the
dangers of being ethical at any cost. “‘They need
to remember that their shareholders are not
empowering them to manage charities but are
asking them to manage their corporations.’”
While this is most definitely true, it should be
noted that doing the right thing has its own
reward, satisfaction in knowing that one did the
right thing (according to De George, mentioned
previously, moral praise is associated with doing
the right thing). Additionally, doing the right
thing may have other rewards, as well, like in
the previous example wherein the dividends of
doing the right thing were not anticipated but
were a direct result of doing the right thing.
Further, the entrepreneur could experience self-
actualization (Maslow, 1957).
The importance of being ethical in day-to-day
dealings with the many stakeholders of the
organization was addressed by the owner of Firm
B.
Firm B: To people who do business with us, we
should be known as an honorable and fair company
composed of people who keep their word and
always fulfill their obligations in a timely fashion.
We are going to pay our bills on time.
If we say it’s going to be there on Tuesday. If
we say the building will be completed in 16
months, it will be done in at least 16 months. No
matter what it costs and we will keep our word.
This statement smacks of integrity – a
hallmark concept of the ethical responsibilities
Carroll’s model asserts are the duties of the firm.
This founder is clearly more concerned about the
spirit of the law and doing the right thing even
though the expectations are not reflected in
society’s laws and regulations than about the
consequences of failing to complete the “job”
in a timely fashion, a lawsuit for breach of
contract.
Both of the statements related here imply a
proaction philosophy. In acting to serve the com-
munity through chairing a social benefit and in
cultivating the reputation to be an honest and fair
company, these entrepreneurs anticipate the
positive role they play in society and rise to play
that role completely. They have clearly made
great efforts, and even sacrifices, to understand
their business and community environment and
to plan strategies that can help their communi-
ties.
Discretionary responsibilities
The founder of Firm B exercised discretionary
responsibility in a very different area of the com-
munity.
 Evolution and Implementation
Firm B: When I first came here I thought that all
companies would buy tickets to arts events. I just
thought that’s what you do in a major metropol-
itan area . . . (W)e got a bunch of tickets and all
our employees went and we were all proud. We
took some clients and some of the management
guys thought it was extreme to spend that much
money. I said, “Look let’s think about this. We’re
going to get exposure. We’re getting in the right
circles”.
A lawyer’s wife turned out was on the board of
(the local ballet) where one of our guys was selling
a tenant fit-up to that law firm. The firm gave us
that job basically because . . . (we) sponsored (a
show) for his wife’s favorite ballet company. An
architect said to us, “You know I wouldn’t do this
– work over a weekend – for any other construc-
tion company. But you guys have helped the arts.
I’m going to do this for you. I’m going to work
this weekend to get you that documentation you
need.”
We now give – we tithe to the arts. In 1983
we made that commitment. Ten percent of the
after tax profits are given to the arts in communi-
ties in which we build.
This statement is an indication that the firm
is meeting its discretionary responsibilities. These
duties are to act voluntarily to aid society in some
way, even if not acting this way would not be
considered unethical. There is no legal mandate
that firm’s tithe to the arts; many firms do not
do so and are not necessarily viewed negatively
for not doing so. Thus, the firm is engaging in
philanthropic activities they have no legal or even
moral obligation to do; however, in fulfilling the
firm’s discretionary responsibilities, the firm may
certainly act to the benefit of society.
This entrepreneur also takes a proaction phi-
losophy with regard to the arts in his commu-
nity, an important “social issue” often
undervalued by society as a whole. Knowing this
and anticipating the need in that area, the entre-
preneur committed himself and his firm to being
of service to those stakeholders.
This action also highlights the conundrum of
an ethical business person engaging in ethical
behavior for both the ethical and more
Machiavellian approach discussed in the intro-
duction section of this paper. The founder of
Firm B has already indicated in many instances
309
his commitment to his community and to doing
quality jobs, the adherence to ethically sound
business practices. In this instance, however, he
found an unexpected payoff for doing the right
thing because it is right. Here, he found that he
gained something other than simple satisfaction
that he did the right thing: he was awarded a
contract as a tangential outcome of his ethical
behavior and he received the help of a required
professional to complete a job in a timely fashion.
The initial motivation of the entrepreneur was to
do the right thing because it was right. His
reward was actually greater than that; in doing
the right thing, his unexpected dividend was the
securing of a contract and the help he needed.
Conclusions and implications
This research identified the presence and imple-
mentation of values, business ethics, and CSR
actions within the two organizations studied. The
study found that the link to financial perfor-
mance of the firm can be either direct or
indirect. However, it is impossible to state that
these linkages caused the changes in financial
performance noted. In one instance, it appeared
to be possible to assign an exact dollar value to
the socially responsible action. In other instances,
it was apparent that the contacts made through
socially responsible behavior resulted in contracts
awarded at a later date. While it is impossible to
generalize the results of this study because of the
small sample, a larger study of the link of CSR
to firm financial performance, using the frame-
work tested in this research, could be undertaken
in order to further explain the direct and indirect
links to performance.
It also appears that the indirect links identi-
fied in the research have associated time lags
between socially responsible behavior by the firm
and financial gain. These lags could be traced in
order to find out how the impact of the time
lag affects the ability of the firm to connect
specific behaviors to future financial reward. A
longitudinal study of a larger sample of firms
using a time frame of from five to ten years could
shed much light on the effect of time lag on the
issue.
310 Brenda E. Joyner and Dinah Payne
For many researchers in the areas of ethics and
corporate social responsibility, the issue of finding
a financial performance link to ethical behavior
is unnecessary and a waste of time. Surely there
are enough compelling reasons besides financial
gain to push firms to support and champion
ethical behaviors from their employees and to
engage in socially responsible behavior with
respect to the environment and the communi-
ties within which they conduct their businesses.
The authors agree with such reasoning. However,
the ability to link socially responsible behavior
with positive firm financial performance adds a
strong, quantitative foundation to the push for
such actions. By showing ways to link changes
in culture that can generate positive financial
performance that shows up as increases in the
bottom line, stock price, or other financial per-
formance measures, a stronger case can be made
for such changes. In a perfect world such studies
would not be necessary. However, in this less-
than-perfect world that we inhabit, where success
for business is measured almost exclusively by
financial performance, the ability to show that
ethical and socially responsible behavior can
boost financial results might provide the impetus
for real change in many organizations.
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Brenda E. Joyner, Ph.D.
Loyola University New Orleans,
6363 St. Charles Avenue, Box 15,
New Orleans, LA 70118,
U.S.A.
E-mail: bjoyner@loyno.edu